As the capital stock increases,________.This means that the marginal product of capital (MPK)________.
A)the slope of the production function falls;declines
B)the slope of the production function increases;goes up
C)the slope of the production function falls;goes up
D)the slope of the production function increases;declines
E)none of the above

Question

Quizplus · Accepted Answer

The marginal product of capital (MPK) declines as the capital stock increases, which is represented by a falling slope of the production function. This is due to the law of diminishing returns, where adding more of one factor of production, holding all else constant, will eventually yield lower incremental per-unit returns.

As the Capital Stock Increases,________