Holding Labor Constant, What Do You Notice About the Marginal

question 4

Multiple Choice

Holding labor constant, what do you notice about the marginal productivity of capital?

• A) The marginal productivity of capital is always increasing.
• B) The marginal productivity of capital is always constant.
• C) The marginal productivity of capital is always decreasing.
• D) The marginal productivity of capital increases, then decreases.

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Definitions:

Inputs

The inputs including workforce, materials, and financial investment employed in the process of manufacturing products or delivering services.

Marginal Revenue Products

The additional revenue generated by employing one more unit of a factor of production, such as labor or capital.

Unit Costs

The cost incurred to produce, store, and sell one unit of a product, including raw material, labor, and overhead costs.