The demand curve for capital is downward sloping because of the increasing marginal cost of capital.

Question

Quizplus · Accepted Answer

The demand curve for capital is downward sloping due to the diminishing marginal returns on capital, not because of increasing marginal cost. As more capital is used, the additional output produced from each additional unit of capital decreases, leading to a lower willingness to pay for additional capital.

The Demand Curve for Capital Is Downward Sloping Because of the Increasing