Question

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly."

This statement
A. is an assertion that capital is subject to increasing returns. B. is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant. C. represents an unconventional view of the production process. D. All of the above are correct.

Answer 1

D. All of the above are correct. All of these sentences are correct in regards to the statement. A capital increase is the increase of equity that a company has.

This statement is an assertion that capital is subject to increasing returns, is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant. This statement also represents an unconventional view of the production process. When there is an increase in the capital, productivity slightly increases to accommodate for the increase in items that need to be completed.

Answer 2

B. is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant.

This is an example of the diminishing rate of returns, which says that increase in output is capped at a certain level and putting more resources in will lead to lower and lower marginal outputs, assuming other factors are held constant. The diminishing rate of returns is a conventional/traditional view of production, not an unconventional one.