Why is investing in technology a better option than investing in labor or capital as a means to sustained growth?
What will be an ideal response?
The main reason why investing in technology is a better option than investing in labor or capital as a means to sustained growth is that investing in labor and capital is subject to diminishing marginal product. This implies that the additional output generated by investing in an extra unit of capital or labor diminishes as we have more of capital and labor. Hence, growth cannot be sustained by investing only on labor or capital. On the other hand, investment in technology builds on previous stocks of technology. Hence, technological growth is exponential in nature.
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A decrease in the wage rate causes
A) a decrease in labor's productivity. B) a rightward shift of the firm's labor demand curve. C) a leftward shift of the firm's labor demand curve. D) an increase in the quantity of labor demanded.
Which of the following events would shift money demand to the right?
a. an increase in the interest rate or an increase in the price level b. an increase in the interest rate, but not an increase in the price level c. an increase in the price level, but not an increase in the interest rate d. neither an increase in the interest rate nor an increase in the price level