Question

In the Solow model, if the first unit of capital increases output by one unit, then the second unit of capital will cause total output to: remain the same. decrease. increase, but by less than one unit. increase by more than one unit.

Answer 1

increase, but by less than one unit

Step-by-step explanation:

Solow growth model is a macroeconomic model that helps to explain the concept of productivity by utilizing factors of production. In the Solow growth model, if the first unit of production increases output by one unit than the second unit of production will increase the output but less than one unit due to diminishing marginal utility concept.