The entire short- run production function shifts upward if:

Question

Quizplus · Accepted Answer

The stock of capital represents the amount and quality of equipment, technology, and infrastructure available for production. An increase in the stock of capital will allow for more efficient use of labor and other inputs, leading to an upward shift of the entire short-run production function. The other choices are incorrect: A) productivity decreases would shift the production function downward; B) an increase in the quantity of labor would increase output but not shift the production function up; and D) diminishing returns close to zero would signify that no more inputs should be added, leading to no shift in the production function.

The Entire Short- Run Production Function Shifts Upward If