Determine the effects on the quantity of capital per worker

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In the Solow growth model, suppose that the marginal product of capital increases for each quantity of the capital input, given the labor input. That is, we relax the assumption that there are diminishing returns to capital and instead assume there are increasing returns. Show the effects of this on the aggregate production function. Using a diagram, determine the effects on the quantity of capital per worker and on output per worker in the steady state. Explain your results.

Reference no: EM13979180

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