0(2) @Y t @L t > 0(3) However, the model also assumes there are diminishing marginal returns to capital accumula-tion. Type of paper. 1 Answer. If there are diminishing returns to labour when capital is fixed,then? Then what do you think will happen. Answer. There are a great deal of studies on the four Asian NIEs (hereafter NIEs) - South Korea, Taiwan, Hong Kong, and Singapore in recent years. Get answers by asking now. Productivity will definitely be unchanged.c. c.old ideas are not as useful as new ones. 1. What's something that makes you look smart in front of your pets? In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. 8 years ago. Still have questions? All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more? In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. The law of diminishing returns remains an important consideration in farming. This principle teaches managers to be aware that if they want to achieve total … Access the answers to hundreds of Diminishing returns questions that are explained in a way that's easy for you to understand. Productivity will definitely rise.d. Favorite Answer. Is it necessary to be rich to help people? It's just like the Gov they cut every body's food stamps to make up the differences in the deffes..They kept takeing away from the poor there will be nothing left to take . a)the marginal product of labour is increasing, b)the average product of labour always exceeds the marginal product of labour, c)the marginal product of labour can be positive or negative. Law of Diminishing Marginal Returns: The law of diminishing marginal returns is a law of economics that states an increasing number of new employees causes the marginal product of … In other words, adding extra amounts of capital gives progressively smaller and smaller Only authorized users can leave an answer! The law of diminishing returns operates in both cases lf more and more labour and capital are applied to the same piece of land, the return per dose diminishes after some time. Thus, diminishing marginal returns imply increasing marginal costs. True… b. old ideas are not as useful as new ones. Answer and Explanation: The right answer choice is c. If both capital and labor increase, productivity will definitely rise. There is conjecture that political instability (5), poor government decisions (4, 5 ), and epidemics such as AIDS (6, 7) may be responsible for some of the exceptional failures to bring down high rates of infant mortality. In particular the decreasing marginal returns is caused by the law of diminishing marginal returns. To illustrate its application to capital, a fixed quantity of capital invested in a manufacturing plant may be considered. capital) If the variable factor of production is increased (e.g. 1 Answer. Still have questions? Similarly, if the third kilogram produces only ¼ ton, then the MC equals $1 per quarter ton, or $4 per ton. If there are diminishing returns to capital, then a. capital produces fewer goods as it ages. If there are no other changes, then if the second kilogram of seeds applied to land produces only half the output of the first, the MC equals $1 per half ton of output, or $2 per ton. All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more? You can't squezz blood out of a turnip. If there are diminishing returns to capital, then? These are: The technique of production does not change – If a producer is using the capital intensive technique, then it will remain the same, and it will not change to labor-intensive technique during the production process. c)the marginal product of labour can be positive or negative. There is conjecture that political instability (5), poor government decisions (4, 5 ), and epidemics such as AIDS (6, 7) may be responsible for some of the exceptional failures to bring down high rates of infant mortality. They are 1 ) increasing the production by keeping some factors constant while changing the other factors 2) Increasing the production by increasing all the factors. In agriculture, the law of diminishing returns sets in at an early stage because one very important factor, i.e., land is a constant factor there and it cannot be increased in right proportion with other variable factors, i.e., labor and capital. Diminishing returns are due to the disruption of the entire productive process as additional units of labor are added to a fixed amount of capital. For instance, lets say we have a pizza store. Join Yahoo Answers and get 100 points today. If there are diminishing returns to capital, then 1. capital produces fewer goods as it ages. In our initial example, the factory has four machines. They are often characterized by sustained rapid economic growth for over three decades (OECD, 1979; Page, 1994; World Bank, 1993; Park and Park, 1989). Describe the two major affective disorders, the heritability of these diseases, and their… Suppose your dorm is 3.66m wide by 3.66m long by 2.71m high and has an air conditioner that… Place your order. This note articulates the opposite view: most evidence suggests diminishing returns powerful enough that further capital accumulation will cause a decline in net capital in-come, rather than an expansion. There are some assumptions for the law of diminishing returns to a factor to be valid. Why don't most people live the traditional life of getting married, having 3 children and a house in the suburbs by age 30 anymore? There is a great deal at stake here, which makes some of the current treatments of heterogeneity look disconcertingly simplistic. . If, following Piketty (2014)’s model of savings, a de-cline in g causes an expansion in the long-term capital stock, both the net capital share Diminishing Returns. Law of diminishing returns helps mangers to determine the optimum labor required to produce maximum output. There are some assumptions for the law of diminishing returns to a factor to be valid. All else equal, if there are diminishing returns and constant returns to scale, then what happens to productivity if capital and labor both increase but capital increases by more? Diminishing Returns. 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