The per-worker production function illustrates the fact that as the amount of capital per worker increases, output per worker _____
A) increases at an increasing rate.
B) increases and then decreases.
C) decreases but at an increasing rate.
D) decreases.
E) increases but at a decreasing rate.

Question

Quizplus · Accepted Answer

The per-worker production function illustrates that as the amount of capital per worker increases, output per worker increases, but at a decreasing rate. This is known as the law of diminishing marginal productivity. Eventually, adding more capital per worker will lead to fewer additional gains in output, resulting in a diminishing return to capital. Therefore, the correct option is (E) increases but at a decreasing rate.

The Per-Worker Production Function Illustrates the Fact That as the Amount