If the production function exhibits decreasing returns to scale in the steady state, an increase in the rate of population would lead to:

Question

Quizplus · Accepted Answer

In the steady state with decreasing returns to scale, an increase in population would lead to an increase in total output due to the increase in the number of workers. However, output per worker would decrease because the production function exhibits decreasing returns to scale. This means that adding more workers would result in smaller increases in output, leading to diminishing returns. Therefore, while total output would increase, output per worker would decrease.

If the Production Function Exhibits Decreasing Returns to Scale in the Steady