1. What are the conquences for growth of diminishing returns to capital? How are some economies able to maintain high growth rates despite diminishing returns to capital?
2.If the technology is held fixed, does the economic growth theory predict that poor countries grow faster than rich countries? Why or why not?
HOW ABOUT NO???
- HuevosLv 69 年前最佳解答
1. Diminishing returns to scale means that when more capital, k, used, the less returns are produced. In simpler terms, it means for every unit of capital you put into production, you'll will <1 of output in return. Therefore to answer the question, diminishing returns to capital would result in a waste of capital to produce an extra unit of output ---- market inefficiency ---- therefore it is best find an equilibrium point on the curve where L and K will give you an ideal return to scale. Another consequence would be the a decrease in growth would be the growth itself. Some of the economies in the world are able to maintain their high growth rates with the presence of diminishing returns to capital is to focus on their labour rather than capital.
2. No it does not. Technology is a key factor that helps poor countries 'catch up.' Technology shifts the overall growth upwards. Although the time it takes a poor country to catch up is ridiculously long, but theoretically attainable over 50+ years. With Te fixed, poor countries will never 'catch up' to the richer countries.
2011-04-17 14:35:42 補充：
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