Figure 7.7 Capital Deepening and New Technology Imagine that the economy starts at point R, with the level of physical and human capital C 1 and the output per capita at G 1 . If the economy relies on...Figure 7.7 Capital Deepening and New Technology Imagine that the economy starts at point R, with the level of physical and human capital C 1 and the output per capita at G 1 . If the economy relies only on capital deepening, while remaining at the technology level shown by the Technology 1 line, then it would face diminishing marginal returns as it moved from point R to point U to point W.
