A cocoa farmer in Trinidad decides to use more fertilizer on the same plot of land to increase output. After a certain point, each additional bag of fertilizer adds less to total output than the previous bag. Which economic principle does this demonstrate?

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Question

A cocoa farmer in Trinidad decides to use more fertilizer on the same plot of land to increase output. After a certain point, each additional bag of fertilizer adds less to total output than the previous bag. Which economic principle does this demonstrate?

Accepted Answer

The law of diminishing returns — Award 1 mark for identifying that when one factor of production is increased while others remain fixed, marginal output eventually decreases. D is incorrect — economies of scale relate to cost reductions from increased scale. B and C are incorrect — these relate to how labour is organised, not variable factor inputs.

Answer

The law of diminishing returns

Answer

Division of labour

Answer

Economies of scale

Answer

Specialisation

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