Diminishing returns explain why labor and capital alone cannot account for the phenomenal growth in productivity during the last 200 years.

Question

Quizplus · Accepted Answer

Diminishing returns theory suggests that as more and more inputs (such as labor and capital) are added to a production process, the marginal output (or productivity) from each additional unit of input will eventually decrease. Therefore, labor and capital alone cannot account for the sustained and exponential growth in productivity that has been observed over the last 200 years. Other factors such as technological advancements, innovation, and improved organizational strategies have played a crucial role in driving productivity growth.

Diminishing Returns Explain Why Labor and Capital Alone Cannot Account