The law of diminishing returns states that as one input variable is increased, there is a point at which the marginal increase in output begins to decrease, holding all other inputs constant. At the point where the law sets in, the effectiveness of each additional unit of input decreases.
System dynamics is an approach to understanding the behavior of complex systems over time. It deals with internal feedback loops and time delays that affect the behavior of the entire system.
The systems are characterized by:
- structure – composition of elements
- behavior – involved inputs, processes and outputs of material, energy and/or information
- interconnections – structural and functional relations between elements
- emerging properties-system properties that do not appear in individual elements
Emergent properties is that it’s the property of the whole, and only exists as a whole, not a property of the component bits. Emerging properties have a fundamental impact on the system performance and becomes extremely important to understand behavior of variables trajectory with respect to system state of diminishing or negative returns.