The Principle of Diminishing Returns

The Principle of Diminishing Returns states that as you increase one input in a process—like adding more workers or resources—the additional output or benefit gained from each extra unit tends to decrease after a certain point. For example, initially, adding workers to a project boosts productivity significantly, but beyond a certain number, each new worker contributes less to overall output. This concept highlights that there’s a limit to how much benefit can be gained from increased inputs and helps in optimizing resource allocation for maximum efficiency.