Diminishing returns mean that there is a point where further optimization does not make sense anymore

Diminishing returns is an economic concept that occurs when increasing input or resources in a production process leads to progressively smaller increases in output. This principle is based on the assumption that all other factors remain constant, and it highlights the limitations of relying solely on increased input for growth.

Key Takeaways

• Economic concept: Diminishing returns describes a situation where added input results in smaller increases in output.
• Production process: The principle applies to any process involving resource allocation and output generation.
• Constant factors: The concept assumes all other factors remain unchanged while increasing input.
• Growth limitations: Diminishing returns emphasizes the importance of considering alternative strategies for growth beyond simply adding more resources.