What the law of diminishing returns?
if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output (Source: https://www.britannica.com/topic/diminishing-returns)
How does the law of diminishing returns apply to testing?
This is a more accurate portrayal.
At the start of your testing period, if you increase your testing effort you will increase the value you receive from testing (say from Point A to Point B) but later in the project, an increase in your testing effort will result in a smaller increase in value (compared to earlier on in the project), this is shown in the picture above from Points C to D.