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Microeconomics

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The Force of the Law of Diminishing Returns

MICRO-@N8GHJ

Garth Hader and Paul Pettine are discussing the growth of their battle station company, the Live Moon. Highlight the line (not the initials) that is an incorrect analysis of their situation.

Highlight Answer(s) Below

GH: How do you think our battle station company is able to grow so fast? PP: You know, our astronomical growth is really based on how productive we keep our peons. GH: I wonder if this due to how great we are as managers, getting our peons to work overtime without any drop in efficiency. PP: I'd like to point out that or firm isn't *that* big yet, there's still a lot of hiring to be done. That might be why we haven’t seen diminishing marginal returns from them, the peons aren't running into each other yet. GH: Our technology is improving so fast that the law of diminishing marginal returns doesn’t apply.