Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Adding more input will always increase output indefinitely
B
Each additional input will eventually yield less additional output
C
Fixed inputs can be increased to counteract diminishing returns
D
Diminishing returns only occur when there are no changes in technology
Understanding the Answer
Let's break down why this is correct
Answer
The primary implication of diminishing marginal returns in production is that as you add more of one input, like workers or machines, while keeping other inputs constant, the additional output you get from each new input will eventually decrease. This means that after a certain point, hiring more workers may not lead to a proportionate increase in production, and could even slow things down if there are not enough resources for everyone. For example, if a factory has 10 machines and adds more workers, the first few workers might significantly increase production, but after a certain number, the extra workers might just get in each other's way, leading to less overall output. This concept helps businesses understand that there is a limit to how much they can produce efficiently, guiding them in making decisions about resource allocation. Ultimately, recognizing diminishing marginal returns helps companies optimize their production processes and avoid waste.
Detailed Explanation
When you add more of something, like workers, each new worker helps less than the one before. Other options are incorrect because Some people think that adding more inputs will always lead to more output; It's a common belief that you can just add more fixed inputs, like machines, to fix diminishing returns.
Key Concepts
Diminishing Marginal Returns
Production Efficiency
Resource Allocation
Topic
Diminishing Marginal Returns
Difficulty
easy level question
Cognitive Level
understand
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