In a Diagram of the Economy's Production Function That Plots

question 44

Multiple Choice

In a diagram of the economy's production function that plots labor input on the horizontal axis and output on the vertical axis, an increase in the capital stock is represented by

• A) a movement along the production function to higher levels of labor input and output.
• B) an upward shift in the production function reflecting the corresponding increase in labor productivity due to the increase in capital.
• C) a downward shift in the production function due to the decline in labor's share in producing output.
• D) a movement along the production function to lower levels of labor input.
• E) none of the above.