Diminishing returns to physical capital means that,when the amount of human capital per worker and the state of technology are held fixed,each increase in the amount of physical capital per worker leads to:

Question

Quizplus · Accepted Answer

Diminishing returns to physical capital means that as the amount of physical capital per worker increases, the marginal product of labour initially increases but eventually starts to decrease. This means that each increase in the amount of physical capital per worker leads to a smaller increase in the marginal product of labour, until a point is reached where adding more physical capital actually reduces the marginal product of labour. Therefore, choice A is the correct answer.

Diminishing Returns to Physical Capital Means That,when the Amount of Human