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.Assuming no technological change, if Canada increases capital per hour worked by $40,000 every year between 2015 and 2020, we would expect to see
A)real GDP per hour worked will increase by the same increment each year between 2015 and 2020.
B)real GDP per hour worked will be lower in 2020 than it was in 2015.
C)the per-worker production function will get flatter over time.
D)the per-worker production function will shift up every year there is increase in capital per hour worked.
E)the per worker production function will become steeper every year.

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.Assuming no technological change, if Canada increases capital per hour worked by $40,000 every year between 2015 and 2020, we would expect to see
A)real GDP per hour worked will increase by the same increment each year between 2015 and 2020. 
B)real GDP per hour worked will be lower in 2020 than it was in 2015. 
C)the per-worker production function will get flatter over time. 
D)the per-worker production function will shift up every year there is increase in capital per hour worked. 
E)the per worker production function will become steeper every year.

Quizplus · Accepted Answer

The per-worker production function typically exhibits diminishing returns to capital, meaning that as more capital per hour worked is added, the additional output (real GDP per hour worked) generated from each additional unit of capital decreases. This results in the production function becoming flatter over time as capital per hour worked increases.

Figure 72 Alt Text for Figure 7