For Three Years, There Was No Technological Change in Longland

question 49

Multiple Choice

For three years, there was no technological change in Longland but capital per hour of labour increased from $10 to $20 to $30 and real GDP per hour of labour increased from $3.80 to $5.70 to $7.13. Then in the fourth year, capital per hour of labour remained constant but real GDP per hour of labour increased to $10. Longland ________ experience diminishing returns because ________.

• A)does; in the fourth year capital per hour of labour does not change
• B)does; as capital per hour of labour increases, real GDP per hour of labour increases but by smaller amounts
• C)does not; as capital per hour of labour increases, real GDP per hour of labour also increases
• D)does not; in the fourth year capital per hour of labour does not change
• E)does; all countries experience diminishing returns