A consequence of increasing marginal costs of producing digital music players in Japan is

Question

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Increasing marginal costs mean that it becomes more expensive to produce each additional unit of digital music players. This will make it less profitable for Japanese producers to specialize solely in this product. Instead, they may choose to produce a combination of digital music players and other products with lower marginal costs. This is known as partial specialization and is represented by B. The other options are not as likely because Japan is a major exporter of digital music players and restricting imports of them would not be in its best interest.

A Consequence of Increasing Marginal Costs of Producing Digital Music