The Following Figure Shows Two Aggregate Production Functions

question 147

Multiple Choice

The following figure shows two aggregate production functions.

-Refer to the figure above.What does the slope of the aggregate production function 2 between the origin and point A imply?

• A) The returns for increases in the physical capital stock are decreasing.
• B) The returns for increases in the physical capital stock are increasing.
• C) The returns for increases in the physical capital stock are negative.
• D) The returns for increases in the physical capital stock are first positive and then negative.

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