Problem 2.a. In the neoclassical growth model, there are diminishing returns to physical capital and diminishing returns to human capital. Butthere are constant returns to scale. Hence, the economy can grow forever by accumulating both kinds of capital without ever facingdiminishing returns. Comment the various aspects of this statement.b. Discuss the "rivalry" and "excludability" properties of each of the following goods.• a. An aspirin• b. The formula to produce aspirin• c. Cable TV• d. Lobsters in the Atlantic Ocean• e. A cow in a farm• f. A zoom meeting• g. A grilled cheese sandwich• h. The Pythagoras theorem• i. The Solow model

Neoclassical growth theory is AN theory that explains however the confluence of 3 driving…

Answered: Problem 2. a. In the neoclassical…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Productivity And Growth

Section: Chapter Questions

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