Preheat the oven to 350 degrees and line a cupcake tin with four paper liners.
In a mixing bowl, stir together the flour, sugar, baking powder, and cinnamon until evenly combined.
Add the softened butter, egg, and milk to the dry ingredients. Mix until a smooth batter forms.
Fold the diced apples into the batter until they are distributed throughout.
Divide the batter evenly among the four liners, filling each about two-thirds full.
Bake for 18 to 20 minutes, or until a toothpick inserted in the center comes out clean. Let the cupcakes cool in the tin for 5 minutes, then transfer them to a wire rack.
Once cooled, drizzle each cupcake with 1 tablespoon of caramel sauce and press one apple slice on top.