Does the law of diminishing returns apply to capital as well as ...

[penguins]

Does the law of diminishing returns apply to capital as well as labor? Explain why or why not.
 
  What will be an ideal response?

Question 2

Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price.
 
  Indicate whether the statement is true or false

[jazzlynnnnn]

Answer to Question 1

The law of diminishing returns applies to capital as well as labor. The marginal product of capital is the change in the total product resulting from a one-unit increase in capital, holding the quantity of labor constant. As the quantity of capital increases for a given level of labor, the first units of capital will increase output substantially. But as capital continues to increase, eventually the increase in production starts to get smaller and diminishing returns to capital are occurring.

Answer to Question 2

TRUE