How would a manufacturer benefit by using fewer scarce resources in the production process?

• A. By reducing production costs and increasing potential profit margins
• B. By increasing the opportunity cost of production
• C. By making the final product less competitive in the market
• D. By decreasing the efficiency of production

Answer: (A)

Verified step by step guidance

1. Understand the concept of scarce resources: Scarce resources are limited inputs used in production, such as labor, raw materials, or capital, which have alternative uses.
2. Recognize that using fewer scarce resources means the manufacturer is reducing the amount of limited inputs required to produce goods.
3. Analyze how reducing the use of scarce resources affects production costs: Using fewer scarce resources typically lowers the cost of production because less of the costly inputs are needed.
4. Consider the impact on profit margins: Lower production costs can increase the difference between revenue and costs, thereby increasing potential profit margins.
5. Evaluate the other options: Increasing opportunity cost or decreasing efficiency would not benefit the manufacturer, and making the product less competitive would harm market position, so these are not advantages.