Question

The law of BLANK says that the more you do something, the harder it is to keep doing it. Therefore, the returns for doing it diminish.

a) diminishing utility
b) diminishing returns
c) increasing utility
d) increasing returns

Answer 1

The answer is 'b) diminishing returns', which refers to the principle that as more resources are contributed towards a production process, the marginal gain from each additional resource decreases.

Step-by-step explanation:

The correct answer to the student's question is 'b) diminishing returns'. The law of diminishing returns states that as more resources are added to a production process, the additional output (or return) gained from each additional unit of resource tends to decrease. This principle is widely recognized in economics and it explains that there's a point where the level of benefits gained is less than the amount of money, time, and effort invested. A common example used in this context could be the hiring of new employees; beyond a certain point, each new employee contributes less to productivity than the previous because there is only so much work that can be efficiently divided among them.

In the context of crime reduction, increased government spending initially leads to significant reductions in crime. Eventually, however, further spending results in smaller and smaller declines in crime. This is because key crime reduction tactics may already be in place, and each additional dollar spent might target less critical issues or more challenging criminal activities to deter.