Because of diminishing returns,an economy can continue to increase real GDP per hour worked only if
A)there are decreases in human capital.
B)the per-worker production function shifts downward.
C)there continue to be decreases in capital per hour worked.
D)there is technological change.

Question

Quizplus · Accepted Answer

Diminishing returns occur when adding more inputs leads to a smaller increase in output. Technological change allows for the development of new and improved methods of production, leading to an increase in productivity and a shift in the production function upwards. This allows the economy to continue to increase real GDP per hour worked even with diminishing returns. The other options, such as decreases in human capital, decreasing capital per hour worked, or a shift of the production function downwards, would have a negative effect on productivity and would not allow for an increase in real GDP per hour worked.

Because of Diminishing Returns,an Economy Can Continue to Increase Real