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In the Solow model we are able to convert the aggregate production function into a "per...

In the Solow model we are able to convert the aggregate production function into a "per worker" production function because of the aggregate production function has which characteristic?

A. Differentiability

B. Constant returns to scale

C. Optimality

D. All of the above.

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Answer #1

Correct choice is option A

This is because when a production function is differentiable, an increase in labour by unit can result in increasing the quantity of output without changing the capital unit. This can happen only when the production function is differentiable. At the same time production function can be exhibiting constant returns to scale increasing returns to scale or even diminishing returns to scale. Optimality is not characteristic but is a specific condition .

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