For three years, there was no technological change in Longland but capital per hour of labour increased from $10 to $20 to $30 and real GDP per hour of labour increased from $3.80 to $5.70 to $7.13.Then in the fourth year, capital per hour of labour remained constant but real GDP per hour of labour increased to $10.Longland _______
Experience diminishing returns because _______ .

Question

Quizplus · Accepted Answer

The given information indicates that Longland experienced diminishing returns as capital per hour of labour increased. This is because, in the first two years, real GDP per hour of labour increased with an increase in capital per hour of labour but by smaller amounts. This trend continued in the third year as well. In the fourth year, although capital per hour of labour remained constant, real GDP per hour of labour increased significantly, indicating that Longland did not experience diminishing returns in that year. Therefore, option A is the correct answer.

For Three Years, There Was No Technological Change in Longland