70% of all the firm-level production functions. The figure below depicts such an

Question

70% of all the firm-level production functions. The figure below depicts such an aggregate production function for an economy. The economy is currently at point A in the figure Using your knowledge of the Solow model of economic growth what would be the effect on the aggregate production function of an increase in the number of workers in this economy (as a result of increased immigrationj? Shift the curve to depict the Impact of the increase in the number of workers To refer to the graphing tutorial for this question type, please click bere-

Explanation / Answer

For attaing a long term growth the labour and capital both to be increased and capital rises faster than labour hence capital labour ratio is high during the growth phase but the output per worker declines as a result the natinal income falls the process continues till the state reaches equilibrium point where growth of labour equals growth of capital in this case we can take the point A here .with the increase in the populatio growth the per capita capital per worker decreases this reults in low level of income in the economy

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