You can't squezz blood out of a turnip. Is it necessary to be rich to help people? The Law of Diminishing Marginal Product (more often called, The Law of Diminishing Marginal Returns) states that with a fixed factor, more and more variable inputs applied to production will eventually result in less and less additional output. 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? However, the model also assumes there are diminishing marginal returns to capital accumula-tion. then we lack a theoretical account of why the law of diminishing returns has been suspended for health. Then what do you think will happen. 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. If there are no other changes, then if the second kilogram of seeds applied to land produces only half the output of the first (showing diminishing returns), the marginal cost would equal $1 per half ton of output, or $2 per ton, and the average cost is $2 per 3/2 tons of output, or $4/3 per ton of output. Diminishing returns is a short-run phenomena, where at least one factor of production is fixed in supply. Should we put an end to people who can't find a partner. This law is also called the principle of diminishing marginal productivity. 10) All else equal, if there are diminishing returns to labor and diminishing returns to capital, then what Thus, the law applies to intensive cultivation. This principle teaches managers to be aware that if they want to achieve total … 1 Answer. For instance, lets say we have a pizza store. approaches 1, diminishing marginal returns to labor and capital break down. In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. a.increases in the capital stock increase output by ever smaller amounts. Relevance. human capital has been shown to be relatively unimportant, relative to investment in physical capital, for a country’s long‐run economic success. If an area exhibits diminishing returns, then the social return on each additional dollar will decline as they give more to the charity. In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. If there are diminishing returns to labour when capital is fixed,then? Is being a cashier a mindless and boring job? 1 Answer. It feels that the general pop will probley start taking from the rich to get back at them. Favorite Answer. 2 Answers. Get answers by asking now. "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?" Among these factors, one of the most important factors for the law of increasing returns is fixed capital. Why do so many poor people live in cities? c)the marginal product of labour can be positive or negative. But if, on the other hand, the farmer brings more and more land under cultivation, even then the returns will decrease. Favourite answer. Diminishing Returns. a. Answer Save. by ever smaller amounts. Get help with your Diminishing returns homework. In our initial example, the factory has four machines. Note: the textbook definition: If a firm increases output by adding variable labour to fixed capital then eventually diminishing marginal returns (physical product of labour) will set in. In other words, adding extra amounts of capital gives progressively smaller and smaller increases in output. 4. increases in the capital stock eventually decrease output. Diminishing marginal returns are an effect of increasing input in the short-run, while at least one production variable is kept constant, such as labor or capital. b. d.increases in the capital stock eventually decrease output. Relevance. c. Productivity will definitely rise. 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 . Having 1 machine, we can produce 50 pizzas. 10) All else equal, if there are diminishing returns to labor and diminishing returns to capital, then what labor) are being increased, a point is reached when the additional inputs yield smaller output or diminishing returns relative to the increasing inputs. b)the average product of labour always exceeds the marginal product of labour. Explain why you believe this.? capital) If the variable factor of production is increased (e.g. Answer and Explanation: The right answer choice is c. If both capital and labor increase, productivity will definitely rise. 1. regarding GDP, inflation, and unemployment, what business cycle does this most closely fit? Productivity will definitely be unchanged. Indeed, for , the general CES function given by Equation 1 simplifies to and the Access the answers to hundreds of Diminishing returns questions that are explained in a way that's easy for you to understand. 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. How many hours a day do you use your Personal Computer- PC ( Phablet PC , Tablet PC or Laptop/Desktop PC)? Answer. Similarly, if the third kilogram produces only ¼ ton, then the MC equals $1 per quarter ton, or $4 per ton. b. old ideas are not as useful as new ones. Only authorized users can leave an answer! 3. increases in the capital stock increase output by ever smaller amounts. Productivity will definitely rise.d. c.old ideas are not as useful as new ones. 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 Can you physically look at a female and tell if she is on her period? Diminishing returns occur in the short run when one factor is fixed (e.g. Diminishing return does not talk about good getting old. . Favorite Answer. Answer. b.capital produces fewer goods as it ages. ? d.increases in the capital stock eventually decrease output. If there are diminishing returns to capital, then a. capital produces fewer goods as it ages. To illustrate its application to capital, a fixed quantity of capital invested in a manufacturing plant may be considered. Productivity will definitely fall. The law of diminishing returns applies to capital and labor as well as to land. Favourite answer. depends upon capital and labour inputs as well as a technological e ciency parameter, A. Y t= AF(K t;L t)(1) It is assumed that adding capital and labour raises output @Y t @K t > 0(2) @Y t @L t > 0(3) However, the model also assumes there are diminishing marginal returns to capital accumula-tion. There are several factors that are responsible for the application of these laws. Similarly, if the third kilogram produces only ¼ ton, then the MC equals $1 per quarter ton, or $4 per ton. ? Red Fluffy Panda . Answer and Explanation: The right answer choice is c. If both capital and labor increase, productivity will definitely rise. Relevance. d. None of the above are necessarily correct. "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?" Productivity will definitely fall.b. If there are diminishing returns to capital, then? Continue to order Get a quote. Type of paper. Only authorized users can leave an answer! Join Yahoo Answers and get 100 points today. Academic level. c. 0 0. Answers. Answer Save. 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? Favorite Answer. 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. Conditional Cash Transfers? This law is also called the principle of diminishing marginal productivity. Red Fluffy Panda . O b. old ideas are not as useful as new ones O c. decreases in the capital stock decreases output by ever larger amounts. Can you explain why exports>imports is net capital outflow? Thus, diminishing marginal returns imply increasing marginal costs. Are There Diminishing Returns to Transfer Size in . Here, we have increase in the number of pizzas, but (40<50) we have diminish in return because the increase is not as much as the first machine. But after the point is reached where the plant is fully manned, a … c. 0 0. a)the marginal product of labour is increasing. QUESTION 1 1 points Save Answer If there are diminishing returns to capital, then o a capital produces fewer goods as it ages. What's something that makes you look smart in front of your pets? In particular the decreasing marginal returns is caused by the law of diminishing marginal returns. labor) are being increased, a point is reached when the additional inputs yield smaller output or diminishing returns relative to the increasing inputs. Here there are two methods for increasing the production of a commodity. Lv 6. diminishing returns, and then to use technology as an explanatory variable when the other concepts are seen to not have sufficient explanatory power. Is it possible to maintain a sustained long-run growth despite diminishing returns to capital? If when the plant is undermanned the amount of labor is gradually increased, for a time the product will be increased per unit of labor applied to the capital. They are often characterized by sustained rapid economic growth for over three decades (OECD, 1979; Page, 1994; World Bank, 1993; Park and Park, 1989). Diminishing returns is a short-run phenomena, where at least one factor of production is fixed in supply. Schumpeterian theories of endogenous growth have, to some extent, also been motivated by diminishing returns to R&D by assuming that innovations are spread over a larger variety of products and, therefore, that there is a tendency for decreasing returns to … In addition, with the help of graph of law of diminishing returns, it becomes easy to analyze capital-labor ratio. 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 O b. old ideas are not as useful as new ones O c. decreases in the capital stock decreases output by ever larger amounts. diminishing returns, and then to use technology as an explanatory variable when the other concepts are seen to not have sufficient explanatory power. 2. old ideas are not as useful as new ones. Solution for If there are diminishing returns to labor, then as more workers are hired the total amount produced by all of the workers will decrease. Answer Save. Indeed, for , the general CES function given by Equation 1 simplifies to and the Productivity will definitely be unchanged.c. 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. labour), there comes a point where it will become less productive and therefore there will eventually be a decreasing marginal and then average product. Less number of labor lead to unutilized capital, because capital is indivisible. c. increases in the capital stock eventually d. increases in the capital stock increase output decrease output. d) all of the above. Productivity will definitely fall.b. In industries, the various factors of production can be co-operated, up to a certain point. Thus, diminishing marginal returns imply increasing marginal costs. 8 years ago. c.old ideas are not as useful as new ones. If an organization falls in stage I of production, it implies that … Neoclassical economists assume that each "unit" of labor is identical. c. increases in the capital stock eventually decrease output. Don’t savings increase when interest rate is higher? But if, on the other hand, the farmer brings more and more land under cultivation, even then the returns will decrease. Is it best for capitalism to have someone be able to inherit 50 million dollars tax free simply by being born lucky rich into right family? None of the above are necessarily correct. Decreasing then increasing marginal cost, reflected by a U-shaped marginal cost curve, is the result of increasing then decreasing marginal returns. In other words, adding extra amounts of capital gives progressively smaller and smaller To capture this possibility, growth is often modeled as a quadratic function of aid relative to GDP. b. old ideas are not as useful as new ones. Still have questions? There are a great deal of studies on the four Asian NIEs (hereafter NIEs) - South Korea, Taiwan, Hong Kong, and Singapore in recent years. To illustrate its application to capital, a fixed quantity of capital invested in a manufacturing plant may be considered. 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. In industries, the various factors of production can be co-operated, up to a certain point. Is the 2020s the end of the US dollar being the dominate currency ( FIAT ) in the world ? 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. Access the answers to hundreds of Diminishing returns questions that are explained in a way that's easy for you to understand. Diminishing Returns. 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? Solution for If there are diminishing returns to labor, then as more workers are hired the total amount produced by all of the workers will decrease. Diminishing Returns And Capital And Labor The law of diminishing returns applies to capital and labor as well as to land. 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. 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. 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, at some point an extra worker will add less output to the grand total than the previous worker. Schumpeterian theories of endogenous growth have, to some extent, also been motivated by diminishing returns to R&D by assuming that innovations are spread over a larger variety of products and, therefore, that there is a tendency for decreasing returns to … By adding the 2nd machine, pizza numbers increase to, lets say, 90. Can't find the answer? but the thing is that sooner or later its all got to come to a head. Then poor will get it any way . b.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. d) all of the above. The monetary difference between giving nothing and giving $500,000 is obviously the same as the monetary difference between giving $4.5m and giving $5m. One idea is that aid involves diminishing returns: as aid to a given country increases, it may become harder to use it effectively. c)the marginal product of labour can be positive or negative. One is law of increasing returns in stage I and law of diminishing returns in stage II. 8 years ago. 1. human capital has been shown to be relatively unimportant, relative to investment in physical capital, for a country’s long‐run economic success. 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. Still have questions? a.increases in the capital stock increase output by ever smaller amounts. In Economics, the law of diminishing returns holds that if one input is held constant (capital) while other inputs ( e.g. B It's the same old thing the rich get richer and the poor get poorer. Does deficit finance always lead to inflation? What’s the difference between money and wealth ? The law of diminishing returns remains an important consideration in farming. There are some assumptions for the law of diminishing returns to a factor to be valid. approaches 1, diminishing marginal returns to labor and capital break down. Can't find the answer? Diminishing returns occur in the short run when one factor is fixed (e.g. Lv 6. a)the marginal product of labour is increasing. Why is everyone but us so underdeveloped? 9 years ago. True… 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. 19. The monetary difference between giving nothing and giving $500,000 is obviously the same as the monetary difference between giving $4.5m and giving $5m. This means the second derivative of output with respect to capital is negative. None of the above are necessarily correct. Productivity will definitely be unchanged.c. If there are diminishing returns to labour when capital is fixed,then? 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. Post navigation. I feel that it won't be good. True… This principle teaches managers to be aware that if they want to achieve total … a. 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. 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? Why is S a straight line? Get your answers by asking now. b)the average product of labour always exceeds the marginal product of labour. There is a great deal at stake here, which makes some of the current treatments of heterogeneity look disconcertingly simplistic. Get help with your Diminishing returns homework. labour), there comes a point where it will become less productive and therefore there will eventually be a decreasing marginal and then average product. Productivity will definitely rise.d. labor) are being increased, a point is reached when the additional inputs yield smaller output or diminishing returns relative to the increasing inputs. Smaller and smaller increases in the stores will go to waste marginal returns imply increasing marginal costs PC or PC. 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