DIMINISHING RETURNS Meaning and
Definition
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Diminishing returns is an economic concept that describes the point at which the benefits derived from an input start to decrease, in relation to the increase in the level of that input. It is based on the notion that as resources are continuously added to a fixed input, the rate of increase in output will eventually decrease, resulting in a less proportional or even declining return.
The concept of diminishing returns is often associated with the field of production, where it signifies that after a certain level of resource allocation, the marginal product or output gained from that additional input diminishes. This means that the proportionate increase in output, which was witnessed initially, begins to decline.
For example, in agriculture, when a farmer applies more and more fertilizer to a field, initially it leads to significant yield gains. However, at a certain point, supplying additional fertilizer leads to diminishing returns, as the soil's capacity to absorb and benefit from it gradually diminishes. Eventually, the rate at which the output increases becomes less than the input increase.
The principle of diminishing returns also applies in various other areas, such as economics, business, and personal productivity. It serves as a reminder that there exists an optimal level of resource allocation beyond which the additional gains become less significant or even negative. Understanding this concept enables individuals and organizations to make informed decisions about resource allocation and avoid excessive investment with diminishing returns.
Common Misspellings for DIMINISHING RETURNS
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Etymology of DIMINISHING RETURNS
The term "diminishing returns" originated in the field of economics. The etymology can be understood by breaking down the phrase into its individual components.
1. Diminishing: Derived from the verb "diminish", which comes from the Latin word "diminuere", meaning "to make smaller" or "to decrease".
2. Returns: This refers to the outcomes or results obtained from an investment or input. The term is derived from the verb "return", which has roots in Old French and Latin meaning "to come back" or "to go back again".
Therefore, "diminishing returns" is a compound phrase that describes a situation where the increase in input or investment leads to progressively smaller or diminishing outcomes or returns. It signifies a point where additional effort, resources, or investment has limited or diminishing impact, and the returns become less favorable. This concept is commonly used in economics to explain production and resource allocation.
Idioms with the word DIMINISHING RETURNS
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the law of diminishing returns
The law of diminishing returns is an economic principle that states as more and more resources are allocated or invested in a particular activity or process, the incremental gain or benefit obtained decreases or diminishes after a certain point. In other words, beyond a certain level, additional input or effort results in progressively smaller or diminishing output or return.
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diminishing returns
"Diminishing returns" refers to a point when the level of profits or benefits gained from additional input or effort starts decreasing or becoming less than the amount invested. This term is often used in economics and business to describe the diminishing marginal utility or productivity of resources as more are added.
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