What law states that adding more of one input while holding others fixed eventually yields smaller increases in output?

The law stating that adding more of one input while holding other inputs fixed eventually produces smaller increases in output is the law of diminishing returns.

It describes short-run production: if a farmer keeps adding workers to a fixed-size field, total harvest may rise, but each additional worker eventually contributes less than the previous one. The other inputs—such as land, machinery, or workspace—are held constant, which is why the principle is also called diminishing marginal productivity.

Diminishing returns does not necessarily mean total output falls. Output can continue increasing while the increments become smaller. Only when congestion or overuse becomes severe might additional input reduce total production.

This concept differs from economies of scale. Diminishing returns concerns increasing one input while other inputs stay fixed; economies of scale examine what happens when all inputs expand together. It also differs from the law of demand, which concerns prices and quantities purchased rather than physical production.