The principle of diminishing returns holds that output increases when inputs increase, but increases in output slow with additional increases in input. Eventually more input increases may turn negative. Mathematically, the first derivative is positive, and the second derivative is negative. For instance, spending $1 on a program may generate $10 in results, but spending $2 on that same program may only generate $15 in results. Eventually, there could be no additional return (or a negative return) for additional dollars spent.
Glossary Term