The law states that unit of value at some points starts to decrease with every new increase of the factor of production (like giving to charities, building chairs etc.) all other things equal. It’s highly connected to marginal utility.
It’s because of oversaturation, that next increase of the factor of production doesn’t return the same value.
Examples
- If there would be 100 really sick people per year (that could potentially die) and we’ve got 500 doctors, then 100 hundred doctors would be assigned 100 really sick people and the rest of them would get less critical cases (their returns would be smaller). If we still continue to add more and more doctors this returns would even smaller and smaller (from mild cases to trivial cases etc.).
- If there would be tree to pickup per season then first guy would pick the Low hanging fruit, but each additional guy would find picking apples more and more hard (they would be more and more often out of reach).