QuestionAugust 13, 2025

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are diminishing returns to capital so the poor country grows slower. increasing returns to capital so the poor country grows slower. diminishing returns to capital so the poor country grows faster. increasing returns to capital so the poor country grows faster.

Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are diminishing returns to capital so the poor country grows slower. increasing returns to capital so the poor country grows slower. diminishing returns to capital so the poor country grows faster. increasing returns to capital so the poor country grows faster.
Two countries are the same, except one is poorer. Assuming the traditional assumption about the production function is made there are diminishing returns to capital so the poor country grows slower. increasing returns to capital so the poor country grows slower. diminishing returns to capital so the poor country grows faster. increasing returns to capital so the poor country grows faster.

Solution
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Answer

Diminishing returns to capital so the poor country grows faster. Explanation 1. Identify the production function assumption The traditional assumption about the production function is diminishing returns to capital. 2. Analyze the impact on growth rate With diminishing returns to capital, a poorer country with less capital will experience higher marginal returns from additional capital compared to a richer country. This leads to faster growth for the poorer country.

Explanation

1. Identify the production function assumption<br /> The traditional assumption about the production function is diminishing returns to capital.<br /><br />2. Analyze the impact on growth rate<br /> With diminishing returns to capital, a poorer country with less capital will experience higher marginal returns from additional capital compared to a richer country. This leads to faster growth for the poorer country.
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