Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will ______ in Alpha compared to Beta, holding other factors constan
a. less
b. more
c. not at all
d. by the same amount

Respuesta :

Answer: The correct answer is "a. Less".

Explanation: According to the principle of diminishing returns to capital, an additional unit of capital will less in Alpha compared to Beta, holding other factors constan.

The law of diminishing returns is an economic concept that shows the decrease of a product or a service as productive factors are added to the creation of a good or service. It is a marginal decrease, that is, the increase is smaller every time.

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