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When law of diminishing returns is a universal law, why is AP found to be much higher in developed economies like of US than in less developed economies like of India? Give two reasons.?
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When law of diminishing returns is a universal law, why is AP found to...
Reasons of high AP in developed countries are..1) advance technologies r used by them...2) their rich economies ..Labour in these countries r fulfilled with capital and using high quality technology ...Ur welcome#arnav
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When law of diminishing returns is a universal law, why is AP found to...
AP in Developed Economies vs Less Developed Economies


The law of diminishing returns states that as more units of input are added to a fixed amount of resources, the marginal product of each additional unit of input will eventually decrease. This law is universal and applies to all economies, regardless of their level of development. However, the average product (AP) of labor is found to be much higher in developed economies like the US than in less developed economies like India. This can be attributed to the following reasons:


1. Capital Intensity


Capital intensity refers to the amount of capital used per unit of labor. Developed economies tend to be more capital-intensive, meaning they have higher levels of capital per worker. This is due to their higher levels of investment in physical and human capital. This higher capital intensity leads to higher productivity and therefore higher AP.


In contrast, less developed economies like India tend to be more labor-intensive, meaning they have lower levels of capital per worker. This is due to their lower levels of investment in physical and human capital. This lower capital intensity leads to lower productivity and therefore lower AP.


2. Technology


Technology plays a crucial role in determining the level of productivity and AP. Developed economies tend to have access to more advanced technology than less developed economies. This advanced technology allows for higher levels of productivity and therefore higher AP.


Less developed economies like India, on the other hand, tend to have limited access to advanced technology. This limits their productivity and therefore lowers their AP.


Conclusion


In conclusion, the law of diminishing returns is a universal law that applies to all economies. However, the AP of labor is found to be much higher in developed economies like the US than in less developed economies like India. This can be attributed to their higher capital intensity and access to advanced technology.
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When law of diminishing returns is a universal law, why is AP found to be much higher in developed economies like of US than in less developed economies like of India? Give two reasons.?
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