In the traditional view, which production process is considered when studying economic growth?
A) constant returns
B) increasing returns
C) diminishing returns
D) diminishing returns for low levels of capital, and increasing returns for high levels of capital

Question

Quizplus · Accepted Answer

The traditional view of production process assumes diminishing returns. This means that as more and more units of a variable input (such as labor) are added to a fixed input (such as capital), the output per unit of the variable input will eventually decrease. This is a common assumption in economic models of growth and development.

In the Traditional View, Which Production Process Is Considered When