An Alaska appraiser values a 5-acre rural parcel. Comparable sales exist for 2-acre parcels, but the 5-acre parcel does not simply equal 2.5 times the value of a 2-acre parcel. This reflects the principle of:

Explanation

Diminishing returns (or the principle of increasing returns, depending on direction) recognizes that adding more units of a component does not necessarily add proportionate value. A 5-acre parcel may be worth less per acre than a 2-acre parcel if larger parcels have lower per-acre demand, or more if larger parcels are scarcer and more useful.