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Which of the following statements best illustrates the principle of diminishing

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Question: Which of the following statements best illustrates the principle of diminishing returns in resource allocation?

Options:

  1. Increasing the number of workers in a factory will always increase output proportionately.
  2. After a certain point, adding more resources results in smaller increases in output.
  3. Investing in technology will always yield higher returns than investing in labor.
  4. Resource allocation should be based solely on market demand.

Correct Answer: After a certain point, adding more resources results in smaller increases in output.

Solution: 

The principle of diminishing returns states that after a certain point, adding more of a resource will yield progressively smaller increases in output, making option 1 correct.

Which of the following statements best illustrates the principle of diminishing

Practice Questions

Q1
Which of the following statements best illustrates the principle of diminishing returns in resource allocation?
  1. Increasing the number of workers in a factory will always increase output proportionately.
  2. After a certain point, adding more resources results in smaller increases in output.
  3. Investing in technology will always yield higher returns than investing in labor.
  4. Resource allocation should be based solely on market demand.

Questions & Step-by-Step Solutions

Which of the following statements best illustrates the principle of diminishing returns in resource allocation?
  • Step 1: Understand what the principle of diminishing returns means. It means that if you keep adding more of one resource (like labor or materials) to a fixed amount of another resource (like land), the extra output you get from each additional unit will start to decrease after a certain point.
  • Step 2: Look at the options provided in the question. Identify which statement describes a situation where adding more of a resource leads to smaller increases in output.
  • Step 3: Choose the option that best illustrates this principle. This will be the one that shows that after a certain point, more of the resource does not lead to proportionate increases in results.
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