Figure 7-1. On the horizontal axis, K/L represents capital (K) per worker (L). On the vertical axis, Y/L represents output (Y) per worker (L).

-Refer to Figure 7-1. The curve becomes flatter as the amount of capital per worker increases because of
A) increasing returns to capital.
B) increasing returns to labor.
C) diminishing returns to capital.
D) diminishing returns to labor.

Question

Figure 7-1. On the horizontal axis, K/L represents capital (K) per worker (L). On the vertical axis, Y/L represents output (Y) per worker (L).
 
-Refer to Figure 7-1. The curve becomes flatter as the amount of capital per worker increases because of
A) increasing returns to capital. 
B) increasing returns to labor. 
C) diminishing returns to capital. 
D) diminishing returns to labor.

Quizplus · Accepted Answer

As the amount of capital per worker increases, the curve becomes flatter due to diminishing returns to capital. This means that each additional unit of capital added to the production process leads to smaller increases in output than the previous unit of capital. Therefore, the curve becomes flatter as we move to the right along the horizontal axis.