The efficiency of induction motors decreases at lower horsepower ratings due to several factors, including increased slip and mechanical losses. For instance, a 1 HP motor may achieve 85% efficiency, while a 1/4 HP motor operates at a lower efficiency due to higher weight per power unit and greater relative losses. The dimensions of the motor, particularly the stator diameter, are optimized for higher torque at higher power ratings, which contributes to lower efficiency in smaller motors. Additionally, as power ratings decrease, the slip increases, leading to higher electrical losses per horsepower. Overall, these factors result in diminished efficiency for low horsepower induction motors.