Diminishing Returns


The concept revises the law of diminishing returns as a tool that helps to understand and predict benefits and maximise returns. This knowledge can help business owners measure the amount of expected benefits when increasing production output.

Technique Overview

Diminishing Returns Definition

Diminishing Returns is the phenomenon whereby the benefit from an extra unit of input declines as the quantity of that input increases (Mankiw, 2009).

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Business Evidence

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Business Application

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Professional Tools

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Further Reading

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Diminishing Returns References (4 of up to 20) *

  • Conway, E. (2009) 50 Economics Ideas You Really Need to Know. Quercus.
  • Dannen, C. (2010) Why the Microsoft-Yahoo Search Deal Won’t Help Bing. BNET, 19 February. Available at: [Accessed on 25 October 2011].
  • Hagel, J., Brown, J.S. (2008) Innovation for Hard Times. BusinessWeek, 21 November. Available at: [Accessed on 25 October 2011].
  • Hirschey, M. (2009) Fundamentals of Managerial Economics. Cengage Learning.

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