Question one (1)

a. State the law of diminishing marginal returns (2 marks)

b. Explain the stages of production (12 marks)

c. Explain the relevance of the stages of production to a business operator? (6 marks)

Question two (2)

a. Explain the following in not more than half a page (2 marks each)

i. Opportunity cost.

ii. Production possibility frontier.

iii. scarcity

b. Using an appropriate diagram, explain how the production possibility frontier becomes a model of scarcity, choice and opportunity cost. (14 marks)