Scenario: Country X and Country Y have identical aggregate production functions as shown in the figure below. The amount of physical capital stock available to each country is also equal. However, the labor supply for Country X is HX, while the labor supply for Country Y is HY.

-Refer to the scenario above.What does the slope of the aggregate production function imply?
A) The diminishing marginal product of labor
B) The diminishing marginal product of capital
C) The quantity of labor supplied
D) The quantity of capital supplied

Question

Scenario: Country X and Country Y have identical aggregate production functions as shown in the figure below. The amount of physical capital stock available to each country is also equal. However, the labor supply for Country X is HX, while the labor supply for Country Y is HY.
 
-Refer to the scenario above.What does the slope of the aggregate production function imply?
A) The diminishing marginal product of labor 
B) The diminishing marginal product of capital 
C) The quantity of labor supplied 
D) The quantity of capital supplied

Quizplus · Accepted Answer

The slope of the aggregate production function represents the marginal product of labor, which typically diminishes as more labor is added, holding other inputs constant.

Scenario: Country X and Country Y Have Identical Aggregate Production