In Neoclassical growth theory, when labor increases for a fixed level of capital, the aggregate...
Question:
In Neoclassical growth theory, when labor increases for a fixed level of capital, the aggregate production function exhibits
A) Diminishing output
B) Diminishing marginal returns
C) Increasing marginal returns
D) Constant marginal returns
Production:
In the short run the production of a good takes place using two types of inputs: variable inputs and fixed inputs. The fixed inputs or factors remain the same irrespective of the level of production. Unlike the fixed factors, the variable factors keep on changing with the level of production.
Answer and Explanation: 1
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View this answerB. Diminishing Marginal Returns.
Reason: As per Neo classical growth theory when the amount of labour keeps on increasing to the constant amount of...
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