Law of Decreasing Returns

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The Law of Decreasing Returns is an economic principle that holds that larger amounts of the agents of production beyond a certain point (the point of decreasing returns) will not yield a return commensurate with the additional investment required.


Stated simply:  Improvements made to property will increase the value of the property by more than cost.  At some point additional expenditures will not produce an increase in value commensurate with the cost.  When additional expenditures do not increase value by at least the amount of the cost, the point of decreasing returns has been reached.

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