The law of diminishing returns is an economic principle that states as more of a variable input is added to a production process while keeping other inputs constant, the increase in output will eventually decrease. In other words, at some point, the benefits gained from increasing the input will diminish, and may even turn negative. This is because the marginal productivity of each additional unit of input decreases as more input is added. This principle is important for businesses to understand in order to optimize their production and resource allocation.
