In the absence of increases in the supply of labor, increases in the capital stock are subject to diminishing returns.

Question

Quizplus · Accepted Answer

According to the law of diminishing returns, any factor of production (such as capital) will experience diminishing returns when the quantity of other factors of production (such as labor) remains constant. Therefore, if there is no increase in the supply of labor, increases in the capital stock would eventually lead to diminishing returns.

In the Absence of Increases in the Supply of Labor