Return-diminishing

Return-diminishing describes a scenario where the marginal benefit derived from an action, investment, or effort decreases as the action is repeated or the investment/effort increases. It's a fundamental concept in economics, psychology, and other fields, reflecting the reality that initial gains are often easier to achieve than subsequent ones. This principle highlights the importance of resource allocation, diversification, and understanding the limits of productivity or enjoyment. It underlines the fact that more isn't always better.

Return-diminishing meaning with examples

• A student initially improves their grade dramatically by studying an hour a day. Each subsequent hour of study, while still beneficial, adds progressively less to their score due to fatigue and diminishing returns from repeated review of the same material. Eventually, further study may even negatively impact performance due to burnout and information overload, a clear demonstration of the principle in action.
• Investing in a stock initially yields substantial profits. As the investor continues to buy more shares of the same stock, its price becomes increasingly volatile due to market saturation, and the rate of return starts to decline. The investor realizes that more investment in the same asset can result in less returns, a clear sign of diminishing return.
• A factory, initially improves output through the addition of a new worker. The second worker adds nearly as much as the first, but the next workers add successively less, because space, equipment, and management become crowded. The increase in overall production for each additional worker slowly starts to fall. The factory is encountering return-diminishing.
• Enjoying a particular food provides immense pleasure at first. However, consuming excessive quantities leads to satiety, reducing the enjoyment derived from each additional serving. Eventually, continued consumption may even become unpleasant, showcasing how returns in satisfaction often diminish and potentially become negative with overindulgence, a common experience