Question

Consider the economies of hermes and gobbledigook, both of which produce gaggles of gop using only tools and workers. suppose that, during the course of 30 years, the level of physical capital per worker rises by 4 tools per worker in each economy, but the size of each labor force remains the same.

Answer 1

labor" (and any subsequent words) was ignored because we limit queries to 32 words.

Answer 2

Answer: Production will increase at a decreasing rate (diminishing marginal returns)

Explanation:

When the one factor of production increase production experiences Diminishing Marginal Returns assuming the other factor is held constant. The extra output (marginal product) generated by increasing one factor of production Decreases as we continue to increasing that factor of production.

Hermes and Gobledigook economies uses labor/workers and tools to produce gaggles of gop. When the level Physical capital per worker increases to 4 tools per work in each country, production will increase but at a decreasing rate because tools will not be used efficiently. Workers have more tools than they need.