diminishing returns, law of

Cultural Dictionary

diminishing returns, law of definition


An economic law propounded by David Ricardo, also called the law of diminishing marginal returns. It expresses a relationship between input and output, stating that adding units of any one input (labor, capital, etc.) to fixed amounts of the others will yield successively smaller increments of output.

Note: In common usage, the “point of diminishing returns” is a supposed point at which additional effort or investment in a given endeavor will not yield correspondingly increasing results.
The American Heritage® New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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