As capital per worker rises,output per worker rises.However,the increase in output per worker from an addition to capital is smaller,the larger is the existing amount of capital per worker.

Question

Quizplus · Accepted Answer

This statement reflects the diminishing marginal returns to capital. As more and more capital is added to an economy, the additional increase in output that results from each additional unit of capital decreases. This means that the increase in output per worker from adding a unit of capital will be smaller when there is already a large amount of capital per worker present in the economy.

As Capital Per Worker Rises,output Per Worker Rises