Contain below two characteristic
- Diminishing marginal productivity of labor and capital
- constant returns to scale
But….Isn’t above contradictory? No fully understand…
It has constant marginal product, but diminishing marginal productivity.
I’m not sure about the difference between the two though.. If anyone can clarify that would be great.
I don’t fully understand it either but:
- Diminishing marginal productivity of labor and capital: when you only increase one input and leave others changed.
- constant returns to scale: percentage of output = percentage change to ALL inputs.
I can’t say I fully understand it either but I feel like this gets me a little closer. Someone else have a take?
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