Law of diminishing returns can seem counter-intuitive
Problem: The Law of Diminishing Returns can seem counter-intuitive. What example of diminishing returns could be used to explain this concept to a friend?
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Q1. If L is increased by 1 percent, that is to L=1.01 with capital unchanged, what is the resulting percentage increase in output? Q2. Describe the nature of returns to scale for this production function.
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The Law of Diminishing Returns can seem counter-intuitive. What example of diminishing returns could be used to explain this concept to a friend?
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