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Diminishing The principle of '''diminishing marginal returns consist of the inevitable ''' states that [[production system]]s have a point beyond which additions each additional unit of a variable factor ([[input) ]] will yield diminishing marginal returns (less and less additional [[output) per unit of the variable factor]]. All other factors of production are held fixed for this analysis. Note that at first there may be increasing marginal returns, and this principle about diminishing marginal returns expresses what will be inevitably reached.