Glossary · Micro · Production and costs

Law of diminishing marginal returns

Add more of one input to a fixed amount of the others and eventually each extra unit adds less output than the one before. Ten cooks in a small kitchen get in each other’s way. It is why marginal cost eventually rises.

Also called: diminishing returns

Taught in: Diminishing Returns

Related terms

Marginal product of labor (MPL)Marginal cost (MC)Returns to scale

More from production and costs

Average fixed cost (AFC)Average product of labor (APL)Average total cost (ATC)Average variable cost (AVC)Cobb-Douglas production functionEconomies and diseconomies of scaleFixed cost (FC)Isoquant

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