The Convergence Hypothesis Assumes That Industrialized Countries Will Grow at a Slower

question 43

Multiple Choice

The convergence hypothesis assumes that industrialized countries will grow at a slower rate because:

• A) diminishing returns in the short run will eventually leads to economies of scale in the long run.
• B) with high capital per worker ratios, increasing investment will be required to replace old
• C) most industrialized countries have a low ratio of capital per worker.
• D) most industrialized countries operate at a high level of underemployment.

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Definitions:

Consumer Surplus

Consumer surplus represents the discrepancy between what consumers are prepared and capable of spending for a product or service and the actual amount they end up paying.

Artificially Scarce Goods

Products or services whose availability is limited by the seller to increase demand or price, rather than by natural scarcity.

Natural Monopolists

Entities that dominate a market due to inherent advantages, such as economies of scale, which prevent efficient competition.

Average Total Costs

The total of all costs associated with production divided by the number of units produced, giving the cost per unit.