Question 21M.3.HL.TZ0.3d
| Date | May 2021 | Marks available | [Maximum mark: 2] | Reference code | 21M.3.HL.TZ0.3d |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Outline | Question number | d | Adapted from | N/A |
Note that a widget is an imaginary product.
In the country of Laurania, the widget industry operates as an oligopoly. The Minister for Finance is worried that the firms in the industry might abuse their power by acting together as a monopoly, and has said that the industry’s concentration ratio is cause for concern.
It has been observed that the law of diminishing returns operates in the widget industry.
Outline the law of diminishing returns.
[2]
The majority of candidates were able to achieve 1 mark with reference to increasing inputs having, at some stage, a negative influence on output. However, many responses were not specific enough for level 2, neglecting to refer to the application of more variable factors to one or more fixed factor. It was also common for lower-achieving responses to refer to a decrease in output rather than a decrease in marginal product.
