B. Diminishing Returns and the Catch-Up Effect
1. Definition of Diminishing Returns: the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases.
a. As the capital stock rises, the extra output from an additional unit of capital will fall.
b. Thus, if workers already have a large amount of capital to work with, giving them an additional unit of capital will not increase their productivity by much.