Other things the same, another unit of capital will increase output by more in a poor country than in a rich country.

Question

Quizplus · Accepted Answer

This is due to the principle of diminishing marginal returns, which suggests that in a poor country (with less capital to begin with), an additional unit of capital will have a larger impact on increasing output compared to a rich country that already has a high level of capital.

Other Things the Same, Another Unit of Capital Will Increase