The Neoclassical growth model assumes that, with a given state of technology, increases in the use of a single factor will eventually

Question

Quizplus · Accepted Answer

According to the Neoclassical growth model, increases in the use of a single factor will eventually lead to decreasing marginal returns, which means that the average product of the factor will inevitably decrease. This is due to the assumption of diminishing marginal product of inputs, which means that as more and more of a single factor is employed, the additional output generated by that factor will eventually decrease. Therefore, choice B is the best answer.

The Neoclassical Growth Model Assumes That, with a Given State