All else equal,if there are diminishing returns,then which of the following is true if a country increases its capital by one unit?
A)Output will rise by more than it did when the previous unit was added.
B)Output will rise but by less than it did when the previous unit was added.
C)Output will fall by more than it did when the previous unit was added.
D)Output will fall but by less then it did when the previous unit was added.

Question

Quizplus · Accepted Answer

Diminishing returns means that as more units of a factor of production (in this case, capital) are added, the increase in output from each additional unit will eventually decrease. Therefore, if a country increases its capital by one unit, the increase in output will still be positive but less than it was when the previous unit was added. This is consistent with option B.

All Else Equal,if There Are Diminishing Returns,then Which of the Following