Diminishing Marginal Product
The principle that the marginal product of a factor of production will diminish as a firm uses more and more of that factor, assuming all other factors of production are held constant.
(Dwayne Benjamin, Toronto PPG 1002H)
As we use more of a particular factor of production, we can generally expect the marginal product to diminish. This is also called the “law of diminishing marginal product”. This isn’t actually an iron-clad law, but is rather a common feature of most kinds of production processes.
Definition prepared by students at the University of Toronto School of Public Policy and Governance and edited by Ben Eisen.