As more units of capital are added, output
A) increases at an increasing rate.
B) increases at a constant rate.
C) increases at a decreasing rate.
D) remains constant.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as more units of capital are added to a fixed amount of labor, the increase in output will eventually decrease. This means that the increase in output will slow down, resulting in a decreasing rate of growth.

As More Units of Capital Are Added, Output