Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increasing Output Indefinitely
B
Decreasing Returns Eventually
C
Constant Returns to Scale
D
Optimal Production Efficiency
Understanding the Answer
Let's break down why this is correct
Answer
Diminishing marginal returns is an important concept in economics that describes how adding more of one resource, like labor, can lead to smaller increases in output after a certain point. For example, imagine a farm where you keep adding workers to help with planting. Initially, each new worker helps produce a lot more crops, but eventually, you might find that adding more workers doesn’t help much because there isn’t enough land or equipment for everyone to use effectively. In this case, if we think about increasing capital, like machines or tools, we can say that increasing capital will lead to diminishing returns as well. This means that while more machines can help produce more goods, after a certain amount, adding more machines will not significantly increase production because they might not be used efficiently.
Detailed Explanation
When you keep adding more capital, like machines, there comes a point where each new machine helps less than the last one. Other options are incorrect because Some might think that adding more capital will always lead to more output; This option suggests that output will always increase by the same amount with more capital.
Key Concepts
Diminishing Marginal Returns
Production Efficiency
Resource Allocation
Topic
Diminishing Marginal Returns
Difficulty
medium level question
Cognitive Level
understand
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