if there are diminishing returns to capital, then

a. Then what do you think will happen. Schumpeterian theories of endogenous growth have, to some extent, also been motivated by diminishing returns to R&D by assuming that innovations are spread over a larger variety of products and, therefore, that there is a tendency for decreasing returns to … Productivity will definitely be unchanged. 3. increases in the capital stock increase output by ever smaller amounts. 1. The Law of Diminishing Marginal Product (more often called, The Law of Diminishing Marginal Returns) states that with a fixed factor, more and more variable inputs applied to production will eventually result in less and less additional output. This law is also called the principle of diminishing marginal productivity. They are often characterized by sustained rapid economic growth for over three decades (OECD, 1979; Page, 1994; World Bank, 1993; Park and Park, 1989). There is a great deal at stake here, which makes some of the current treatments of heterogeneity look disconcertingly simplistic. labour), there comes a point where it will become less productive and therefore there will eventually be a decreasing marginal and then average product. They are 1 ) increasing the production by keeping some factors constant while changing the other factors 2) Increasing the production by increasing all the factors. The law of diminishing returns operates in both cases lf more and more labour and capital are applied to the same piece of land, the return per dose diminishes after some time. There is conjecture that political instability (5), poor government decisions (4, 5 ), and epidemics such as AIDS (6, 7) may be responsible for some of the exceptional failures to bring down high rates of infant mortality. Why do so many poor people live in cities? If there are no other changes, then if the second kilogram of seeds applied to land produces only half the output of the first, the MC equals $1 per half ton of output, or $2 per ton. Can you physically look at a female and tell if she is on her period? You can't squezz blood out of a turnip. If an area exhibits diminishing returns, then the social return on each additional dollar will decline as they give more to the charity. It's just like the Gov they cut every body's food stamps to make up the differences in the deffes..They kept takeing away from the poor there will be nothing left to take . This principle teaches managers to be aware that if they want to achieve total … a)the marginal product of labour is increasing. Relevance. then we lack a theoretical account of why the law of diminishing returns has been suspended for health. What's something that makes you look smart in front of your pets? . But if, on the other hand, the farmer brings more and more land under cultivation, even then the returns will decrease. But if, on the other hand, the farmer brings more and more land under cultivation, even then the returns will decrease. In industries, the various factors of production can be co-operated, up to a certain point. If there are diminishing returns to capital, then 1. capital produces fewer goods as it ages. QUESTION 1 1 points Save Answer If there are diminishing returns to capital, then o a capital produces fewer goods as it ages. Lv 6. All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more? For instance, lets say we have a pizza store. but the thing is that sooner or later its all got to come to a head. a.increases in the capital stock increase output by ever smaller amounts. approaches 1, diminishing marginal returns to labor and capital break down. b. old ideas are not as useful as new ones. Productivity will definitely fall.b. O b. old ideas are not as useful as new ones O c. decreases in the capital stock decreases output by ever larger amounts. This note articulates the opposite view: most evidence suggests diminishing returns powerful enough that further capital accumulation will cause a decline in net capital in-come, rather than an expansion. There are some assumptions for the law of diminishing returns to a factor to be valid. c. increases in the capital stock eventually decrease output. 10) All else equal, if there are diminishing returns to labor and diminishing returns to capital, then what Can you explain why exports>imports is net capital outflow? But after the point is reached where the plant is fully manned, a … If there are diminishing returns to capital, then? Is it necessary to be rich to help people? In agriculture, the law of diminishing returns sets in at an early stage because one very important factor, i.e., land is a constant factor there and it cannot be increased in right proportion with other variable factors, i.e., labor and capital. It feels that the general pop will probley start taking from the rich to get back at them. There are a great deal of studies on the four Asian NIEs (hereafter NIEs) - South Korea, Taiwan, Hong Kong, and Singapore in recent years. Solution for If there are diminishing returns to labor, then as more workers are hired the total amount produced by all of the workers will decrease. Access the answers to hundreds of Diminishing returns questions that are explained in a way that's easy for you to understand. approaches 1, diminishing marginal returns to labor and capital break down. None of the above are necessarily correct. Diminishing returns occur in the short run when one factor is fixed (e.g. c. Productivity will definitely rise. B It's the same old thing the rich get richer and the poor get poorer. diminishing returns, and then to use technology as an explanatory variable when the other concepts are seen to not have sufficient explanatory power. Favorite Answer. Explain why you believe this.? then what's in the stores will go to waste. If an organization falls in stage I of production, it implies that … c. 0 0. b)the average product of labour always exceeds the marginal product of labour. Among these factors, one of the most important factors for the law of increasing returns is fixed capital. All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more? The monetary difference between giving nothing and giving $500,000 is obviously the same as the monetary difference between giving $4.5m and giving $5m. Having 1 machine, we can produce 50 pizzas. To capture this possibility, growth is often modeled as a quadratic function of aid relative to GDP. 19. 2. old ideas are not as useful as new ones. Diminishing returns occur in the short run when one factor is fixed (e.g. In industries, the various factors of production can be co-operated, up to a certain point. Favourite answer. b)the average product of labour always exceeds the marginal product of labour. c. 0 0. If when the plant is undermanned the amount of labor is gradually increased, for a time the product will be increased per unit of labor applied to the capital. a. d. None of the above are necessarily correct. Favorite Answer. labor) are being increased, a point is reached when the additional inputs yield smaller output or diminishing returns relative to the increasing inputs. This note articulates the opposite view: most evidence suggests diminishing returns powerful enough that further capital accumulation will cause a decline in net capital in-come, rather than an expansion. If there are diminishing returns to capital, then a. capital produces fewer goods as it ages. Answers. 1 Answer. Decreasing then increasing marginal cost, reflected by a U-shaped marginal cost curve, is the result of increasing then decreasing marginal returns. Red Fluffy Panda . In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. To illustrate its application to capital, a fixed quantity of capital invested in a manufacturing plant may be considered. Diminishing Returns. Why is everyone but us so underdeveloped? The law of diminishing returns remains an important consideration in farming. There are some assumptions for the law of diminishing returns to a factor to be valid. Productivity will definitely rise.d. One is law of increasing returns in stage I and law of diminishing returns in stage II. Schumpeterian theories of endogenous growth have, to some extent, also been motivated by diminishing returns to R&D by assuming that innovations are spread over a larger variety of products and, therefore, that there is a tendency for decreasing returns to … Answer Save. Conditional Cash Transfers? Answers. There is conjecture that political instability (5), poor government decisions (4, 5 ), and epidemics such as AIDS (6, 7) may be responsible for some of the exceptional failures to bring down high rates of infant mortality. If an area exhibits diminishing returns, then the social return on each additional dollar will decline as they give more to the charity. Is being a cashier a mindless and boring job? Favorite Answer. regarding GDP, inflation, and unemployment, what business cycle does this most closely fit? c.old ideas are not as useful as new ones. Less number of labor lead to unutilized capital, because capital is indivisible. Diminishing returns is a short-run phenomena, where at least one factor of production is fixed in supply. Law of Diminishing Marginal Returns: The law of diminishing marginal returns is a law of economics that states an increasing number of new employees causes the marginal product of … c)the marginal product of labour can be positive or negative. All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more? Productivity will definitely fall.b. d.increases in the capital stock eventually decrease output. If there are no other changes, then if the second kilogram of seeds applied to land produces only half the output of the first, the MC equals $1 per half ton of output, or $2 per ton. Get help with your Diminishing returns homework. 2 Answers. 9 years ago. Access the answers to hundreds of Diminishing returns questions that are explained in a way that's easy for you to understand. "all else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more?" Then poor will get it any way . capital) If the variable factor of production is increased (e.g. Neoclassical economists assume that each "unit" of labor is identical. Still have questions? True… Get help with your Diminishing returns homework. Diminishing Returns. There are several factors that are responsible for the application of these laws. Still have questions? 1 Answer. 8 years ago. These are: The technique of production does not change – If a producer is using the capital intensive technique, then it will remain the same, and it will not change to labor-intensive technique during the production process. c. increases in the capital stock eventually d. increases in the capital stock increase output decrease output. Thus, the law applies to intensive cultivation. Is it possible to maintain a sustained long-run growth despite diminishing returns to capital? Favourite answer. d) all of the above. Are There Diminishing Returns to Transfer Size in . Relevance. QUESTION 1 1 points Save Answer If there are diminishing returns to capital, then o a capital produces fewer goods as it ages. Lv 6. Post navigation. labor) are being increased, a point is reached when the additional inputs yield smaller output or diminishing returns relative to the increasing inputs. Diminishing returns is a short-run phenomena, where at least one factor of production is fixed in supply. In particular the decreasing marginal returns is caused by the law of diminishing marginal returns. Productivity will definitely rise.d. Only authorized users can leave an answer! 1. Get answers by asking now. a. To illustrate its application to capital, a fixed quantity of capital invested in a manufacturing plant may be considered. It talks about the more machines we add to the company, although our production increases, but it increases by a slower rate. d. increases in the capital stock increase output by ever smaller amounts. Red Fluffy Panda . Diminishing Returns And Capital And Labor The law of diminishing returns applies to capital and labor as well as to land. Does deficit finance always lead to inflation? ? True… If, following Piketty (2014)’s model of savings, a de-cline in g causes an expansion in the long-term capital stock, both the net capital share then we lack a theoretical account of why the law of diminishing returns has been suspended for health. None of the above are necessarily correct. In our initial example, the factory has four machines. a)the marginal product of labour is increasing. 10) All else equal, if there are diminishing returns to labor and diminishing returns to capital, then what Don’t savings increase when interest rate is higher? Similarly, if the third kilogram produces only ¼ ton, then the MC equals $1 per quarter ton, or $4 per ton. What’s the difference between money and wealth ? In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. Anonymous. Continue to order Get a quote. a.increases in the capital stock increase output by ever smaller amounts. b. old ideas are not as useful as new ones. b.capital produces fewer goods as it ages. b.capital produces fewer goods as it ages. depends upon capital and labour inputs as well as a technological e ciency parameter, A. Y t= AF(K t;L t)(1) It is assumed that adding capital and labour raises output @Y t @K t > 0(2) @Y t @L t > 0(3) However, the model also assumes there are diminishing marginal returns to capital accumula-tion. Answer. Indeed, for , the general CES function given by Equation 1 simplifies to and the Here there are two methods for increasing the production of a commodity. In other words, at some point an extra worker will add less output to the grand total than the previous worker. labor) are being increased, a point is reached when the additional inputs yield smaller output or diminishing returns relative to the increasing inputs. The law of diminishing returns operates in both cases lf more and more labour and capital are applied to the same piece of land, the return per dose diminishes after some time. Here, we have increase in the number of pizzas, but (40<50) we have diminish in return because the increase is not as much as the first machine. 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Exports > imports is net capital outflow capital gives progressively smaller and smaller increases in the capital increase.

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