📚 Learning Guide
Diminishing Marginal Returns
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If a farmer observes that adding more labor to their fixed amount of land results in smaller increases in crop yield, what is the most likely underlying cause of this phenomenon?

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Choose the Best Answer

A

The fixed land is unable to support more labor efficiently, leading to diminishing returns.

B

The labor is becoming more skilled, increasing overall productivity.

C

The cost of labor is increasing, making it less efficient to hire more workers.

D

The farmer is using outdated techniques that are not conducive to higher yields.

Understanding the Answer

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Answer

The phenomenon the farmer is observing is called diminishing marginal returns. This means that as the farmer adds more workers to the same piece of land, each additional worker contributes less to the overall crop yield compared to the previous one. For example, if the farmer starts with two workers and they produce a certain amount of crops, adding a third worker might only increase production slightly, because the land can only support a certain amount of labor effectively. The fixed amount of land limits how much each worker can contribute, as they may get in each other’s way or run out of space and resources. Thus, while more labor can initially help, there comes a point where the benefits start to decrease.

Detailed Explanation

When a farmer adds more workers to the same land, each worker has less space and resources. Other options are incorrect because The idea here is that better skills lead to more productivity; This option suggests that higher costs make hiring less efficient.

Key Concepts

Diminishing Marginal Returns
Production Efficiency
Resource Allocation
Topic

Diminishing Marginal Returns

Difficulty

medium level question

Cognitive Level

understand

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