DIMINISHING RETURNS, in economics, represents the special application to land of the more generalized "law of dimin ishing productivity." This latter law may be stated as follows: "The size of the product obtained in a given productive process varies greatly according to the way in which the various agents of production are combined. If the supply of all other agents is kept constant, while the supply of one specific agent is in creased, the average product per unit of this specific agent may increase to a maximum point, but, thereafter will, as a rule, diminish continuously, though often irregularly." This law is ap plicable to all types of production. Economists early noted the application of this law to land and called it "the law of diminish ing returns." They observed that, beyond a certain point, as a greater value of labour and other agents of production are applied to a given area of land, the physical product obtained per addi tional unit of value invested on the land tends to diminish con tinually. Experience everywhere confirms the existence of this principle.
Any farmer knows that it is unprofitable to increase the in tensity of use or cultivation of land beyond a certain point. It is a generally accepted fact that, when population density in a nation increases beyond an optimum point, average productivity per capita diminishes, and hence poverty increases.
(See EcoNomics). (W I. K.)