For Three Years, There Was No Technological Change in Longland

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

Correct Answer:

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