Question

As we produce increasing amounts of a particular good, the resources used in its production ( \(\angle 07)\) a) become more suitable b) become less suitable c) continue to have the same suitability

Short answer

As the production of a good increases, the resources used in the process become less suitable, according to the Law of Diminishing Returns. This means that each additional input yields a smaller incremental increase in output. Therefore, the correct answer is (b) become less suitable.

Step-by-step solution

Understand the concept of resource suitability

In the context of this exercise, resource suitability refers to how well a particular resource can be used or is suitable for producing a particular good. As production increases, it's important to see if the resources used in the process become more or less suitable, or whether their suitability remains the same.

Analyze each given option

a) Become more suitable: This option suggests that as production increases, the resources used become better and more efficient at producing the good. b) Become less suitable: This option suggests that as production increases, the resources used become less efficient and less appropriate for producing the good. c) Continue to have the same suitability: This option suggests that the suitability of the resources used remains constant, regardless of the increase in production.

Determine the Law of Diminishing Returns

The Law of Diminishing Returns is an economic principle that states that as more inputs (resources) are added in the production process, at a certain point, each additional input yields a smaller incremental increase in output. In other words, as the production of a good increases, the resources used in the production process become less suitable because they are less efficient in producing additional units of the good.

Choose the correct answer

Based on the understanding of resource suitability and the Law of Diminishing Returns, the correct answer is: b) as the production of a good increases, the resources used in the process become less suitable.

Key concepts

Resource Suitability

Resource suitability is a fundamental consideration in production processes. It describes how appropriate and effective a resource is for producing a particular good. When a resource is highly suitable, it can efficiently contribute to higher production levels. However, as production of a certain good increases, this suitability can change.
In the context of production economics, the initial resources used are typically the most suitable for producing a good. They are efficient and effective, leading to high productivity at the beginning.

• For example, if you're using rich soil to grow crops, this natural resource is highly suitable initially.
• As you keep using the same soil continuously without replenishing its nutrients, it may become less suitable over time.

This kind of decrease in suitability is crucial to understand both for managing today's resources and planning future resource needs.

Production Efficiency

Production efficiency relates to how effectively resources are used to produce goods. It's about getting the maximum output from the given set of inputs, without wasting any resources. In a perfectly efficient scenario, every resource used would contribute to the desired output.
At the start of a production process, efficiency is usually high because the most suitable resources are available. However, as production scales up and the need for more resources arises, efficiency can begin to falter.

• Initial resources are often utilized fully, leading to high efficiency and high return.
• As lesser suitable resources are brought into the production process, efficiency decreases.

This ties closely with the Law of Diminishing Returns, wherein adding more of the same type of input results in progressively smaller increases in output. Understanding this concept can help in making informed decisions on resource allocation and managing production processes effectively.

Economic Principles

Economic principles like the Law of Diminishing Returns play a crucial role in understanding production and resource allocation. This law indicates that after a certain point, adding additional inputs in the production process results in reduced output gains. It's a pivotal concept in resource management and decision-making.
When a company begins production, it typically experiences increasing returns due to utilizing the most effective resources. However, over time:

• Resources that were initially well-suited become less effective as they're exhausted.
• Additional inputs contribute less and less to the overall output.

This understanding helps businesses and economists to determine the optimal point of input utilization before diminishing returns set in.
Grasping this principle enables more strategic planning and efficient management of resources, ensuring that production levels are maintained or increased optimally without unnecessary waste.