The Law of Diminishing Marginal Returns in a Toy Truck Factory

The law of diminishing returns is a simple, yet fundamental concept in economics. When the producer of a good wishes to expand its output, in the short-run it may do so by employing more workers or having its existing workers work longer hours. To acquire more capital and technology or to build new factories takes time and money, thus we say that in the short-run, a firm's plant size is fixed; the only variable resource is labor.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.c...

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Thank you for the clarity and visual concepts, which makes it a whole lot easier to understand compared to merely reading texts!

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wow, this was a really good video. So clear and no jargon used. I finally understood what marginal means.

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Excellent! Also in Switzerland! Good luck on your exams tomorrow!

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[@portal9935]

Is it correct that the law of diminishing marginal product only applies to the short run? because of fixed capital? ..in the long run there is economies of scale where more capital can be added to accommodate additional workers, so is this correct or incorrect?

[@quarantinelifegaming]

Thank you so much sir, but i had 1 question which might be silly but just for clarification.
So when the 6th worker was employed ryt, the total production decreased by 1 truck. But how?
I get that cost of production gets higher as he has to pay for the 6th worker and only gets lesser profit in return, but how does it affect the total production?
Like 5 workers were making 9 trucks, and then the 6th worker comes in. But those 5 workers are still able to make 9 trucks and the 6th worker can just sit around have a chill and get his wage.
Isn't this right?
Or are we assuming that the 6th worker interrupts the other 5 workers and not let them make 9 trucks?
thank you.

[@JasonWelker]

The 6th worker REDUCES the productivity of the previous 5 workers. He is literally just getting in the way and making the overall production less efficient than if there were fewer workers.

[@quarantinelifegaming]

Ohh, I thought he might just sit there, relax, get his wage and go home. But I think that might happen in real world but we ASSUME in economics that he also WORKS and thus interrupts.
thanks a lot. You are really my grade saver keeping me on a high 7.
Thank you.

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