Diminishing returns to capital implies that:

Question

Quizplus · Accepted Answer

Diminishing returns to capital means that the marginal product of capital (MPK) is decreasing. In other words, as more units of capital are added to the production process, the additional output gained by each additional unit of capital becomes smaller and smaller. This happens because other factors of production, like labor, cannot keep up with the increasing amount of capital, resulting in lower productivity.

Diminishing Returns to Capital Implies That