Asked by Caden DeValle on May 09, 2024
Verified
How does the phenomenon of diminishing returns to capital explain the catch-up effect?
Diminishing Returns
An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.
Catch-Up Effect
The theory that poorer economies will tend to grow at faster rates than wealthier ones, allowing them to catch up in terms of income and other economic measures.
Capital
Refers to assets or resources that businesses or individuals use to generate wealth through investment.
- Understand the principle of diminishing returns and its effects on economic expansion.
Verified Answer
Learning Objectives
- Understand the principle of diminishing returns and its effects on economic expansion.
Related questions
The Majority of Economists Believe That Future Innovations Will Not ...
In the Long Run,when a Firm Adds Physical Capital,workers Become ...
When Returns Are Diminishing,the Marginal Cost Curve Is Upward-Sloping
As a Firm Increases Production in the Short Run,the Marginal ...
As More Labor Is Added to a Fixed Amount of ...