Question

In Appellia, it takes 10 units of resources to increase its output of sugar from 12 tons to 13 tons, but 11 units of resources to increase output from 13 tons to 14 tons, and 12 units of resources to increase output from 14 tons and 15 tons, and so on. The need for increasing resources is an example of:________.

a. comparative advantage.
b. diminishing returns to specialization.
c. absolute advantage.
d. mercantilism Porter's diamond model.

Answer 1

b. diminishing returns to specialization.

Step-by-step explanation:

Diminishing returns is also called diminishing productivity. It states that as additional unit of input is used in production it will get to a stage where more of input will be required to maintain output levels.

If the same level of input is used it will result in reduction in output over time.

This is exemplified in this secanrio where it takes 10 units of resources to increase its output of sugar from 12 tons to 13 tons, but 11 units of resources to increase output from 13 tons to 14 tons, and 12 units of resources to increase output from 14 tons and 15 tons.

It takes more input to increase output by 1 ton