Because of Diminishing Returns to Capital, There Is a Limit

question 149

Multiple Choice

Because of diminishing returns to capital, there is a limit to the increases in average labor productivity that can be gained from additional or improved ________.

• A)availability of land and natural resources
• B)physical capital
• C)imports
• D)entrepreneurship

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Definitions:

Preferences

In economics, it refers to the ordering of different alternatives by individuals based on their satisfaction, utility, or happiness.

Compensating Variation

A measure in economics of the amount of money one would need to reach their original utility level after a change in price or income.

Equivalent Variation

An economic measure of the amount of money that leaves an individual equally well off, given changes in prices or utility.

Income

The financial gain received by an individual or entity, typically measured over a certain period, resulting from labor, investments, or other sources.