In a Cobb-Douglas production function the marginal product of capital will increase if:
A) the quantity of labor increases.
B) the quantity of capital increases.
C) labor's share of output increases.
D) average capital productivity decreases.

Question

Quizplus · Accepted Answer

In a Cobb-Douglas production function, the marginal product of capital increases when the quantity of labor increases because the production function exhibits diminishing marginal returns to each input while holding the other input constant. Increasing labor, while keeping capital constant, increases the productivity of capital due to the complementarity between labor and capital in production.

In a Cobb-Douglas Production Function the Marginal Product of Capital