If the stock of physical capital remains constant while employment rises,output

Question

Quizplus · Accepted Answer

When the stock of physical capital remains constant and employment rises, output increases due to the additional labor. However, because the amount of capital is fixed, each additional worker has less capital to work with, leading to diminishing returns. This means that while output increases, it does so at a decreasing rate because the productivity of each additional worker is less than the one before.

If the Stock of Physical Capital Remains Constant While Employment