The law of diminishing marginal productivity involves marginal increases in production return per unit produced. It can also be known as the law of diminishing marginal product or the law of diminishing marginal return. In general, it aligns with most economic theories using marginal analysis. Marginal increases are commonly found in economics, showing a diminishing rate of satisfaction or gain obtained from additional units of consumption or production.

The law of diminishing marginal productivity suggests that managers find a marginally diminishing rate of production return per unit produced after making advantageous adjustments to inputs driving production. When mathematically graphed this creates a concave chart showing total production return gained from aggregate unit production gradually increasing until leveling off and potentially starting to fall.

Different than some other economic laws, the law of diminishing marginal productivity involves marginal product calculations that can usually be relatively easy to quantify. Companies may choose to alter various inputs in the factors of production for various reasons, many of which are focused on costs. In some situations, it may be more cost-efficient to alter the inputs of one variable while keeping others constant. However, in practice, all changes to input variables require close analysis. The law of diminishing marginal productivity says that these changes to inputs will have a marginally positive effect on outputs. Thus, each additional unit produced will report a marginally smaller production return than the unit before it as production goes on.