00:01
So the easiest way to illustrate the law of diminishing returns is to graph it for you, right? what we're thinking here is about a relationship between l, labor, and y, the amount of output.
00:11
Diminishing returns tells you that this function looks something like this, right? that it gets flatter.
00:18
That is the whole idea of diminishing returns.
00:22
And the idea of the flatness is that units of l, are eventually worthless, right? that's the whole idea.
00:36
Diminishing returns means that for each unit of value add, you keep adding one more unit, one more worker, one more worker, one more worker, eventually the workers are going to be worth less.
00:47
Each worker that you add is going to be worth less and less and less over time, right? so now they've given us a fix, a whole bunch of tricky questions.
00:58
And i'll try to walk you through each of them and say why they're wrong.
01:02
A, total output is wrong, right? this is incorrect.
01:11
Remember, it's the idea of diminishing marginal returns, right? on the margin.
01:17
We're not talking about output going down.
01:20
We're talking about a marginal output falling...
