... efficient machinery in the production process, the cost being shared between a greater number of units of output and therefore being more likely to satisfy cost-benefit analysis. c) The law of diminishing returns says that, holding all factors constant except one, there will be some level of the variable input beyond which further increasing it will lead to a steadily decreasing the marginal product of that input. (The marginal product of a variable factor is the increase in output obtained by adding one unit of the variable factor, holding constant the input of all other factors.) The diminishing return on each additional unit of the variable is due to the constraints of other, fixed factors in the production process. This is taken as 'law' because it is empirically true; if diminishing marginal returns did not apply to a production process then it would be productive to continue adding more and more ...

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