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In a capital-abundant country, free trade will cause an increase in the rental capital and a decrease in the marginal product of capital.

a) Increase; Increase
b) Increase; Decrease
c) Decrease; Increase
d) Decrease; Decrease

User Spirulence
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Final answer:

In a capital-abundant country, free trade will increase the rental capital and decrease the marginal product of capital.

Step-by-step explanation:

In a capital-abundant country, free trade will cause an increase in the rental capital and a decrease in the marginal product of capital.

When a capital-abundant country engages in free trade, it can specialize in producing goods that require a large amount of capital. This leads to an increase in the rental capital in the country. However, as more capital is used in production, the marginal product of capital decreases, meaning that each additional unit of capital contributes less to output.

User Deependra Solanky
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