Which of the following statements best illustrates the principle of diminishing returns in resource allocation?
Practice Questions
1 question
Q1
Which of the following statements best illustrates the principle of diminishing returns in resource allocation?
Increasing the number of workers in a factory will always increase output proportionately.
After a certain point, adding more resources results in smaller increases in output.
Investing in technology will always yield higher returns than investing in labor.
Resource allocation should be based solely on market demand.
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.
Questions & Step-by-step Solutions
1 item
Q
Q: Which of the following statements best illustrates the principle of diminishing returns in resource allocation?
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.
