Question

In general, as the amounts spent on providing services for a particular condition grow, diminishing returns set in, meaning that each unit of expenditure yields ever-smaller benefits until a point where ________________.

A. No additional benefits accrue from adding more care
B. Additional benefits are too small to justify the added costs
C. There is displacement of more useful care
D. Perfection is within the reach of all individuals

Answer 1

As spending on services for a condition increases, the law of diminishing returns indicates that additional benefits become too small to justify the costs, which is aligned with marginal analysis. The correct option is B.

Step-by-step explanation:

In the context of the law of diminishing returns, as the amounts spent on providing services for a particular condition grow, there is a point where additional benefits are too small to justify the added costs.

The law of diminishing returns is a fundamental concept in economics which states that adding more resources to a production process improves output to an extent; however, there comes a point where each additional unit of expenditure yields progressively smaller increases in output, or benefit.

This concept is closely related to marginal analysis, which is concerned with the decisions made for small changes from the status quo.