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GDP per worker 1250 D PC1 850 600 c B 300 A 700 800 900 Physical Capital Per Worker Figure 1: Labor Productivity For the next

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Answer - The returns to physical capital are lowest at point C. This is because the returns posses the diminishing returns and they go on dimishing as the graph becomes flatter. At point A it is increasing return , dimishing returns just start at B . At C they become maximum and the curve is flat. Hence we get the lowest returns at point C.

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