What does diminishing returns to capital imply?
A) Capital produces fewer goods as it ages.
B) The value of new technology decreases over time.
C) Increases in the capital stock eventually decrease output.
D) Increases in the capital stock increase output by ever smaller amounts.

Question

Quizplus · Accepted Answer

Diminishing returns to capital means that increases in the amount of capital (such as machinery or equipment) used in production will eventually lead to smaller and smaller increases in output. In other words, at some point, adding more capital will not lead to proportionate increases in output. This is due to factors such as limited resources or the increasing difficulty of coordinating and managing larger amounts of capital.

What Does Diminishing Returns to Capital Imply