# Diminishing Returns

*Macro & Economy — Finicade finance glossary*

Diminishing returns is the principle that adding more of one input while holding others fixed eventually produces smaller and smaller gains. A second engineer on a project may double output; the tenth adds coordination cost. It underpins the Solow growth model's central prediction — that capital accumulation alone cannot sustain growth indefinitely, so long-run growth must come from technology.

**Also known as:** law of diminishing returns, diminishing marginal returns

**Related terms:** [Marginal Utility](https://finicade.com/glossary/marginal-utility), [Economies of Scale](https://finicade.com/glossary/economies-of-scale), [Solow Growth Model](https://finicade.com/glossary/solow-growth-model), [Productivity](https://finicade.com/glossary/productivity), [Capital Budgeting](https://finicade.com/glossary/capital-budgeting)

Source: https://finicade.com/glossary/diminishing-returns