What is the Theory of Diminishing Returns?

Juggernaut314

Particularly in Economics, the theory of diminishing returns stats that there's a point where additional investment doesn't yield the same return. Example, spending 10 dollars on advertising yields sales of 100 dollars. Then spending 10 more dollars on advertising yields an additional 50 bucks in sales, and so on until spending 10 dollars on advertising means that the increase in sales does not offset the additional cost of advertising (implying that you shouldn't have spent that extra 10 dollars). http://en.wikipedia.org/wiki/Diminishing_returns Jan 23 10, 10:18 AM