A farmer in St. Vincent wants to determine whether to plant dasheen or eddoes on a half-acre plot. Which economic principle should guide the decision to maximize profit?

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Question

A farmer in St. Vincent wants to determine whether to plant dasheen or eddoes on a half-acre plot. Which economic principle should guide the decision to maximize profit?

Accepted Answer

Principle of substitution — Award 1 mark for identifying that the principle of substitution guides decisions when choosing between alternative enterprises based on which yields greater returns. B is incorrect — law of diminishing returns relates to increasing inputs on the same enterprise. C is incorrect — comparative advantage relates to trade between regions or countries. A is incorrect — supply and demand determines market prices, not individual farm decisions.

Answer

Principle of substitution

Answer

Law of diminishing returns

Answer

Law of supply and demand

Answer

Principle of comparative advantage

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