In economics, the law of diminishing returns (or law of variable proportions,[1]​ principle of diminishing marginal productivity[2]​ or diminishing marginal returns[3]​) is the decrease in the marginal income of production as a productive factor is added, keeping the others constant. It states that in all production processes, adding more than one productive factor while keeping the others constant (ceteris paribus) will give progressively smaller increases in production per unit.[4]​.

It is a fundamental principle of economics[4]​ and has a main role in the neoclassical theory of production.[5]​.

The concept of diminishing returns dates back to early economists such as Johann Heinrich von Thünen, Anne Robert Jacques Turgot, Thomas Malthus and David Ricardo. However

Classical economists such as Malthus and Ricardo will attribute the decrease in returns on outputs to the decrease in the quality of inputs. Neoclassical economists assumed that each "unit" of work is identical = perfectly homogeneous. Diminishing returns were due to the interruption of the entire production process as units

Additional labor was added to a fixed amount of capital.