A Production Function That Exhibits Diminishing Returns Helps to Explain

question 42

Multiple Choice

A production function that exhibits diminishing returns helps to explain the reason that:

• A) developing countries tend to stay poor.
• B) the gap between developing countries and high-income countries tends to keep growing.
• C) high-income countries do not have fixed technology that limits developing countries.
• D) there is a catch-up growth phenomenon where a developing country is able to grow more rapidly than a high-income country.

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Definitions:

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The act of passing on rights, property, or duties from one individual or group to another.

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A third party who benefits from a contract made between two other parties because one of the primary parties owes a debt to the beneficiary.

Contract

A legally enforceable agreement between two or more parties that creates mutual obligations.

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The person or party who makes a promise or agrees to perform an action or fulfill an obligation under a contract.