Increasing the stock of capital while holding the labor force constant will ________ output at a(n)________ rate.

Question

Quizplus · Accepted Answer

Increasing the stock of capital while holding the labor force constant will increase output due to higher productivity from more capital. However, this increase occurs at a decreasing rate because of diminishing returns to capital; each additional unit of capital adds less to output than the previous one when labor is held constant.

Increasing the Stock of Capital While Holding the Labor Force