Other things the same, countries with low income are likely to increase their income more by adding another unit of capital than are countries that have high income.

Question

Quizplus · Accepted Answer

This is because low-income countries typically have lower levels of capital per worker compared to high-income countries. Adding another unit of capital in such countries can lead to significant increases in productivity, while in high-income countries, the marginal returns to capital may be lower due to already having a high level of capital per worker. This concept is known as the "diminishing marginal returns to capital."

Other Things the Same, Countries with Low Income Are Likely