Law of diminishing marginal product of capital
The law of diminishing marginal product of capital states that as more units of capital are added to the production process while holding all other factors constant, eventually the marginal productivity of each additional unit of capital will begin to decrease. In other words, there is a point at which adding more capital will not result in as much additional output as before.
This concept is based on the idea that if other factors of production, such as labor, remain constant, the effectiveness of each additional unit of capital will decrease as the production process becomes more capital-intensive. This can be due to factors such as diminishing returns or resource constraints.
The law of diminishing marginal product of capital is an important consideration for businesses when making investment decisions and allocating resources. It suggests that there is an optimal level of capital that will maximize productivity and profitability, and going beyond this point may lead to diminishing returns.