What is the Law of Diminishing Marginal Product

The Law of Diminishing Marginal Product, also known as the Law of Diminishing Returns, states that in a production process, as one input (e.g., labor) is incrementally increased while other inputs (e.g., capital, land) are held constant, there comes a point at which the addition of the input results in progressively smaller increases in output. 

In other words, adding more of one factor of production, while keeping others constant, will yield less and less additional output after a certain point. This principle is fundamental in economics and helps explain why simply increasing input does not always lead to proportional increases in output. 

For example, if a factory employs more workers without expanding its machinery or workspace, each additional worker will contribute less to the overall production after a certain number of workers have been hired. Initially, the extra workers might lead to significantly higher production, but over time, the factory becomes overcrowded, and workers interfere with each other, resulting in a reduced marginal product of labor.

This concept is crucial for understanding the efficient allocation of resources and the limitations of production scalability.