Question

Explain why diminishing returns to capital do not take place in the ak model.

Answer 1

$\huge\mathfrak{Hello}$

ANSWER:

The basic underlying assumption of neoclassical philosophical isthat diminishing returns to capital operates in the production process.

The stickiest assumption of this model is that production function does not include diminishing returns to capital.

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Answer 2

The AK model deals with the policies between economic growth and policies. If the diminishing returns are there in the reproducible factors long-term growth of per capita income cannot be achieved.  AK model proves that with the help of the factor accumulation alone (without diminishing returns) continuous growth of per capita income can be generated. This the reason diminish returns does not takes place in AK model.