As a Firm Buys More Capital and Less Labor, the Marginal

Multiple Choice

As a firm buys more capital and less labor, the marginal physical product of capital __________ and the marginal physical product of labor __________, assuming the law of diminishing marginal returns has set in for each factor.

A) decreases; increases
B) increases; increases
C) decreases; decreases
D) increases; remains constant
E) remains constant; decreases