Why do large differences in capital per worker lead to relatively small differences in predicted GDP across countries?

A. The exponent on capital in the production function is much lower than one.
B. Capital is not an input in production.
C. Capital has a high depreciation rate.
D. Workers exert more effort when they have less capital.

Large differences in capital per worker lead to relatively small differences in predicted GDP across countries due to diminishing marginal productivity of capital.

Large differences in capital per worker lead to relatively small differences in predicted GDP across countries because the exponent on capital in the production function is much lower than one. The production function represents the relationship between inputs (such as capital and labor) and output (GDP). In most production functions, the contribution of capital to output diminishes as the amount of capital per worker increases. This diminishing marginal productivity of capital means that the additional output gained from adding more capital becomes smaller as the capital stock increases. Therefore, even if two countries have significantly different levels of capital per worker, the impact on GDP may not be as large as expected due to diminishing returns.

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