Which one of the following is true?
A)The marginal product of capital is positive but declining as the capital stock increases.
B)The marginal product of capital is positive and increasing as the capital stock increases.
C)The marginal product of capital is negative and declining as the capital stock increases.
D)The marginal product of capital is negative but rising as the capital stock increases.

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more units of a variable input (in this case capital) are added to a fixed input (in this case labor), eventually the marginal product of the variable input will decline. Therefore, the marginal product of capital is positive but declining as the capital stock increases.

Which One of the Following Is True