Increasing the capital available to the workforce, holding other factors constant, tends to ______ total outpu

Question

Increasing the capital available to the workforce, holding other factors constant, tends to ______ total output at a(n) ______ rate.

A. increase; increasing

B. increase; decreasing

C. increase; constant

D. decrease; increasing

E. decrease; decreasing

Answer 1

B. Increase; decrease

This is simply the TFP (Total Factor Productivity) and the Decreasing Returns to Scale.

TFP this is when you increase the output while not using any other additional inputs. This can be done by specialization, better management, technology, etc. It is simply using your available resources at an optimum level.

But, if you use this input-driven method to the same production function, you will reach what is called the DIMINISHING MARGINAL RETURNS  which means that if you hold other inputs constant, and you've reached a certain level of employment, you will find that the worker that you added increases the output but not proportionately. OUTPUT INCREASES AT A DECREASING RATE

Answer 2

C. increase; constant

i think.

Answer 3

B. increase; decreasing (because of diminishing returns)