If the quantities of labor and capital in an economy each increase by the same x percent,which of the following will increase by x percent?
A)marginal product of capital
B)economic profits
C)share of capital income in national income
D)rental price of capital
E)none of the above

Question

Quizplus · Accepted Answer

An equal percentage increase in both labor and capital does not necessarily mean that any of the listed items (marginal product of capital, economic profits, share of capital income in national income, rental price of capital) will increase by the same percentage. The effects on these items depend on the production function, market conditions, and other factors that are not specified by a uniform increase in inputs.

If the Quantities of Labor and Capital in an Economy