cobb douglas- mock exam says tfp has diminishing marginal returns to productivity.

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i got this correct. the answer is 2. but the explanation for this is confusing me. “The stated conclusion is accurate in its entirety. The Cobb–Douglas function exhibits constant returns to scale, which means that if all inputs are increased at the same percentage, then output rises at that percentage. Diminishing marginal productivity exists with respect to each individual input (if the other input is held constant)” so does that mean if i hold capital per labor constant then increasing technology has diminishing returns? i thought technology does not have diminishing marginal returns to productivity? i was confused between 3 and 2 actually b/c that statement looked correct to me too but then i decided it had nothing to do with the question and so chose 2.

could someone please clarify this?

Cobb-Douglas is part of neoclassical growth theory, which is an _ exogenous _ growth theory: technology (of which TFP is generally a part) is considered to be outside the economy and, as such, is not considered an input. Inputs exist only within the economy.

thanks Bill. helpful as always.

My pleasure.