Diminishing returns to physical capital means that as more and more physical capital is combined with a fixed amount of human capital and a fixed technology, eventually:

Question

Quizplus · Accepted Answer

Diminishing returns to physical capital means that each additional unit of physical capital added will lead to smaller and smaller increases in aggregate output or real GDP. Eventually, a point is reached where additions to aggregate output or real GDP decline, indicating diminishing returns to physical capital. Therefore, the best answer is C.

Diminishing Returns to Physical Capital Means That as More and More