According to the Law of Diminishing Returns, in a production function when more and more units of the variable factor are used, holding the antities of a fixed factor constant, a point is reached beyond which

The Law of Diminishing Returns, also known as the Law of Diminishing Marginal Product or the Law of Variable Proportions, describes a short-run production scenario where at least one factor of production is fixed [1]. According to this principle, as more units of a variable factor (such as labor) are added to a fixed factor (such as capital), the marginal product of the variable factor initially rises due to better utilization and specialization [1]. However, a specific point is eventually reached beyond which the addition of further variable units leads to a decline in the marginal product [2]. This occurs because the fixed factor becomes scarce relative to the variable factor, causing the extra units to contribute less to total output than previous units. Consequently, while total product may still increase, it does so at a decreasing rate once the marginal product begins to diminish.

Sources

1. [1] Microeconomics (NCERT class XII 2025 ed.) > Chapter 5: Market Equilibrium > Chapter 5 > p. 89
2. [2] Microeconomics (NCERT class XII 2025 ed.) > Chapter 3: Production and Costs > 3.4 THE LAW OF DIMINISHING MARGINAL PRODUCT AND THE LAW OF VARIABLE PROPORTIONS > p. 41