The following figure shows two aggregate production functions.

-Refer to the figure above.As physical capital stock increases from the level that corresponds to point B to the level that corresponds to point A,what can be said about aggregate production function 2 relative to aggregate production function 1?
A) Output increases relatively faster.
B) Output increases relatively slower.
C) Output decreases relatively faster.
D) Output decreases relatively slower.

Question

The following figure shows two aggregate production functions.
 
-Refer to the figure above.As physical capital stock increases from the level that corresponds to point B to the level that corresponds to point A,what can be said about aggregate production function 2 relative to aggregate production function 1?
A) Output increases relatively faster. 
B) Output increases relatively slower. 
C) Output decreases relatively faster. 
D) Output decreases relatively slower.

Quizplus · Accepted Answer

As physical capital stock increases from point B to point A, output increases at a faster rate for aggregate production function 2 compared to aggregate production function 1. This can be observed from the steeper slope of aggregate production function 2.

The Following Figure Shows Two Aggregate Production Functions