All else equal,if there are diminishing returns,then what happens to productivity if both capital and labor increase?
A)Productivity will definitely fall.
B)Productivity will definitely be unchanged.
C)Productivity will definitely rise.
D)None of the above are necessarily correct.

Question

Quizplus · Accepted Answer

If there are diminishing returns, the productivity of adding more capital and labor will not necessarily increase. It may increase initially but at a decreasing rate, and beyond a point, it may even start to decrease. Therefore, none of the options are necessarily correct.

All Else Equal,if There Are Diminishing Returns,then What Happens to Productivity