00:01
Diminishing returns.
00:02
What the heck is it? well, if we can't define it, we are going to be stuck here, right? so this is the point, right, at which fewer, at which additional inputs start yielding less output or less return than before, right? so, you know, we used to be doing some activity, some production, and we used to get so much out of workers, out of machines, but now when we try to do more, we try to push it further, we don't get as much out.
00:43
So the key thing here is additional, right? this is what an economist would think of as marginal, right? when we're thinking about diminishing returns, we're thinking about doing a little bit more, a little bit less.
00:55
Diminishing returns is a statement about marginal properties.
00:59
So the correct answer here is actually when marginal cost is at minimum.
01:07
That's the only answer that makes reference to the margin.
01:17
And this seems a little bit weird, but let's remember what marginal cost is, right? marginal cost is equal to the change in cost over the change in quantity, right? what does diminishing returns mean? well, directly, diminishing returns mean that the change in quantity over the change in inputs is going down, right? as you increase the inputs, you get less and less and less quantity...
