Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries a

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Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all other respects, the two countries a

re 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

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1 answer:

tensa zangetsu [6.8K] · Answer 1 · 2022-03-05T20:25:09+03:00

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

Explanation: According to the principle of diminishing returns to capital, an additional unit of capital will <u>less</u> 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.