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True or False: The shape of the production function reflects the law of diminishing marginal returns.

1 Answer

1 vote

Answer:

True

Step-by-step explanation:

When we graph a production function, we obtain an upward-sloping curve whose gradient (or slope) reaches a peak, and then, begans to flatten until it is fully flat.

This is because the law of diminishing returns states that there is a point when capital and labor are used optimally, and after that point, any additonal unit of capital or labor has a lower marginal productivity.

I will attach a graph of the production function that illustrates this point.

True or False: The shape of the production function reflects the law of diminishing-example-1
User Gustavo Mora
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