Figure 7.2 Alt text for Figure 7.2: In figure 7.2, a graph comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.2: The x-axis is labelled, capital per hour worked.The y-axis is labelled, real GDP per hour worked, Y/L.A concave curve originates from 0 at the vertex and passes through 2 points ($35,000, 1,850)and (40,000, $2000), toward the end of the x-axis.These 2 points are connected to their respective coordinates on the x-axis and y-axis with dotted lines.
-Refer to Figure 7.2.Based on the per-worker production function above, if the Canadian economy raises capital per hour worked from $35,000 to $40,000, by how much will real GDP per hour worked increase?
A)$150
B)$1,850
C)$2,000
D)$5,000
E)$35,000

Question

Figure 7.2  Alt text for Figure 7.2: In figure 7.2, a graph comparing capital per hour worked and real GDP per hour worked.
Long description for Figure 7.2: The x-axis is labelled, capital per hour worked.The y-axis is labelled, real GDP per hour worked, Y/L.A concave curve originates from 0 at the vertex and passes through 2 points ($35,000, 1,850)and (40,000, $2000), toward the end of the x-axis.These 2 points are connected to their respective coordinates on the x-axis and y-axis with dotted lines.
-Refer to Figure 7.2.Based on the per-worker production function above, if the Canadian economy raises capital per hour worked from $35,000 to $40,000, by how much will real GDP per hour worked increase?
A)$150 
B)$1,850 
C)$2,000 
D)$5,000 
E)$35,000

Quizplus · Accepted Answer

The per-worker production function shows diminishing returns to capital, meaning that as capital per hour worked increases, the increase in real GDP per hour worked becomes smaller. The increase from $35,000 to $40,000 in capital per hour worked results in a smaller increase in real GDP per hour worked, which is $150.

Figure 72 Alt Text for Figure 7