The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:A) the more an additional unit of capital adds to production. B) the less an additional unit of capital adds to productionC) less is produced. D) less production is wasted

Question

Anahi Esparza

Business

23 July, 13:31

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:A) the more an additional unit of capital adds to production. B) the less an additional unit of capital adds to productionC) less is produced. D) less production is wasted

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Answers (1)

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Jair Short · Answer 1

B) the less an additional unit of capital adds to production

Explanation:

The diminishing return state that if everything else is held constant, each additional unit will increase production by a fewer amount than previous one. That's because the same amount of resource can only use efficiently a certain amount of capital then there is a loss in this good use and therefore, the output do not increase at the same rate as we add up capital.

A person can do a good use of several type of tool for building a house but I can only use one or two at the time

Adding more tools can increase productivity but in the end there is only one person working.