The slope of the per-worker production function diminishes as the amount of capital per worker increases. This is a reflection of the law of _____
A) increasing marginal returns.
B) diminishing marginal returns.
C) constant marginal returns.
D) first diminishing and then increasing marginal returns.
E) demand.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal returns, as we increase the amount of one input factor (in this case, capital) while holding all other inputs constant (such as labor), the marginal product of that input will eventually decrease. Therefore, as the amount of capital per worker increases, the slope of the per-worker production function will diminish (i.e. become flatter), indicating diminishing returns to capital.

The Slope of the Per-Worker Production Function Diminishes as the Amount