00:01
All right, so this question is talking about whether if a firm has diminishing returns to labor over some range of output, it cannot have economies of scale over that range.
00:11
And this statement is actually very, very false.
00:14
And there's a certain little case that we can do as a counter example to prove this false.
00:21
So we know that this is false.
00:25
And we know this because, let's just say that we're currently at a state of production where, if you add three times the amount of input, you then receive five times the amount of output.
00:44
So this is what we can describe as economies of scale.
00:49
Economies of scale here.
00:54
And so, let's just say that once you're producing more over this range, you then, again, are producing three times this input...