The Fact That the Production Function Relating Output to Capital

question 100

Multiple Choice

The fact that the production function relating output to capital becomes flatter as we move from left to right means that

• A)the marginal product of labour is positive.
• B)the marginal product of capital is positive.
• C)there is diminishing marginal productivity of labour.
• D)there is diminishing marginal productivity of capital.

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Definitions:

Crude Quantity Theory

A simplified version of the quantity theory of money suggesting that an increase in money supply leads to a proportional increase in prices.

M

A symbol often representing money supply in economic discussions, including various measures like M1, M2, and M3.

Q

Quantity, frequently used in economic equations and discussions to denote the amount of goods produced or consumed.

PQ

The product of price (P) and quantity (Q), often used in economics to calculate total revenue or expenditure.