An aggregate production function,when shown on a graph,
A) is linear and slopes upward
B) is linear and slopes downward
C) is horizontal
D) is vertical
E) slopes upward,and flattens out as more labor is used

Question

Quizplus · Accepted Answer

The aggregate production function slopes upward, indicating that output increases with the use of inputs such as labor and capital. However, it eventually flattens out as more labor is used, as there are diminishing marginal returns to labor. Therefore, choice E is the best answer.

An Aggregate Production Function,when Shown on a Graph