Asked by Yousef Abualhawa on Jun 09, 2024
Verified
If capital is a variable input in production, the law of diminishing marginal returns implies that in the short run
A) capitalʹs marginal product is constant.
B) capitalʹs marginal product decreases after a certain point.
C) total product is negative.
D) total product is negative after a certain point has been reached.
Diminishing Returns
The principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.
Marginal Product
The increase in output resulting from a one-unit increase in the input of a production factor, holding all other inputs constant.
- Understand the implications of the law of diminishing marginal returns in production.
Verified Answer
KC
Kimberly CrymesJun 15, 2024
Final Answer :
B
Explanation :
The law of diminishing marginal returns states that as more units of a variable input (in this case, capital) are added to fixed amounts of other inputs, the additional output produced by each new unit of the variable input will eventually decrease. This implies that capital's marginal product decreases after a certain point, not that it remains constant or that total product becomes negative.
Learning Objectives
- Understand the implications of the law of diminishing marginal returns in production.
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