In the Neoclassical Growth Model, the Law of Diminishing Marginal

question 11

Multiple Choice

In the Neoclassical growth model, the law of diminishing marginal returns implies that capital accumulation leads to ever

• A)larger decreases in GDP and large decreases in living standards.
• B)smaller increases in GDP and living standards.
• C)larger levels of unemployment but larger increases in the standard of living.
• D)larger levels of unemployment but small increases in the standard of living.
• E)larger increases in GDP but smaller decreases in living standards.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor costs.

Fixed Costs

Costs that do not change with the amount of goods or services produced by a business over a certain period, such as rent, salaries, and insurance premiums.

Total Revenue

Total Revenue is the total amount of money received by a company for goods sold or services provided during a certain time period.

Total Cost Of Production

The overall expense incurred in manufacturing a product, including the costs of material, labor, and overhead.