Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A factory producing 100 units of a product while incurring higher costs for each additional unit
B
A firm reallocating resources to produce a combination of goods that maximizes total output
C
A business choosing to hire additional workers despite diminishing returns
D
A company increasing its production without considering the cost of additional inputs
Understanding the Answer
Let's break down why this is correct
Answer
Marginal analysis helps us understand how to use our resources most efficiently by looking at the additional benefits of using one more unit of a resource compared to the costs. For instance, imagine a bakery that makes cakes and cookies. If the bakery finds that making one more cake brings in more money than it costs to make it, this is a sign of production efficiency. However, if making cookies instead costs more than the extra money earned, the bakery should focus on cakes. In this way, marginal analysis guides the bakery to allocate its resources, like time and ingredients, to maximize profits.
Detailed Explanation
This option shows how a company can use its resources in the best way. Other options are incorrect because This option suggests that costs go up for each extra unit made; Here, the business hires more workers even though they get less output from each new worker.
Key Concepts
production efficiency
resource allocation
economic efficiency
Topic
Marginal Analysis
Difficulty
hard level question
Cognitive Level
understand
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