Law of Diminishing Marginal Returns (Old Version): Econ Concepts in 60 Seconds Microeconomics

Mr. Clifford from ACDC Econ explains the law of diminishing marginal return in a concise manner. He discusses the relationship between inputs and outputs, using a lawn mowing business as an example. The video covers how to calculate marginal product and illustrates how specialization can initially increase productivity. However, as more workers are added to fixed resources, the additional output begins to decline, demonstrating the law of diminishing marginal returns.

What is the initial output when no workers are hired in the lawn mowing company example?

• Ten lawns

• Seven lawns

• Two lawns

• Zero lawns

How is the marginal product calculated for the first worker in the example?

• By adding the outputs of all workers

• By subtracting the previous total output from the current total output

• By dividing total output by the number of workers

• By multiplying the number of workers by the total output

What happens to the marginal product as more workers are added, according to the law of diminishing marginal returns?

• It increases indefinitely

• It remains constant

• It doubles with each worker

• It eventually decreases

Why can two workers mow more lawns together than separately in the example?

• Because they have more lawnmowers

• Because they have more experience

• Because they work faster individually

• Because they can specialize in different tasks

What is the main reason for the decrease in additional output as more workers are added?

• Limited fixed resources

• Workers are not trained

• Workers become less efficient

• Lack of enough lawnmowers