Diminishing returns
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In economics, diminishing returns is the decrease in the marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, while the amounts of all other factors of production stay constant.
The law of diminishing returns states that in all productive processes, adding more of one factor of production, while holding all others constant ("ceteris paribus"), will at some point yield lower incremental per-unit returns.
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See also
- Diminishing marginal utility, also not to be mistaken for 'diminishing returns'
- Diseconomies of scale, does not assume fixed inputs, and considers costs, thus differing from 'diminishing returns'
- Economies of scale
- Learning curve and Experience curve effects
- Liebig's Law of the minimum
- Marginal value theorem
- Opportunity cost
- Returns to scale
- Pareto principle
- Submodular set function
- Sunk-cost fallacy
- Tendency of the rate of profit to fall
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