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. Does
Longland experience diminising returns? Explain
why or why not.
Is Economic Growth Sustainable? Theories, Evidence,
and Policies (Study Plan 22.5)