The principle of diminishing marginal productivity of capital implies that
A)output will diminish as capital increases.
B)output will increase first,but it will decrease as capital increases.
C)output will increase at diminishing rate as capital increases.
D)output will decrease first,but it will increase as capital increases.

Question

Quizplus · Accepted Answer

The principle of diminishing marginal productivity of capital suggests that as more and more units of capital are added to a production process, the increase in output will eventually start to decline because each additional unit of capital becomes less and less productive. This implies that output will increase at a diminishing rate as capital increases, making choice C the best option.

The Principle of Diminishing Marginal Productivity of Capital Implies That