The production function curve can be used to illustrate diminishing returns to capital.

Question

Quizplus · Accepted Answer

Diminishing returns to capital occurs when adding more capital to an existing production process results in smaller increases in output. This can be graphically illustrated by a production function curve that flattens out as more capital is added, indicating that each additional unit of capital leads to less additional output.

The Production Function Curve Can Be Used to Illustrate Diminishing