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Answer :
In the Solow growth model of an economy with population growth but no technological change, the break-even level of investment must provide capital for new workers.
Therefore, the break-even level of investment must provide for new workers who enter the economy. The Solow growth model is an economic model developed by Robert Solow in the 1950s that attempts to explain long-term economic growth. It is based on the assumption that capital accumulation is the main driver of economic growth in the long run.
The Solow growth model assumes that there are three factors of production: capital, labor, and technology. In the Solow growth model, the break-even level of investment must do the following: Offset the depreciation of existing capital Provide capital for new workers Equal the marginal productivity of capital (mpk)Keep the level of capital per worker constant .
However, the break-even level of investment does not have to equal the marginal productivity of capital. Instead, it is determined by the savings rate, which is the fraction of income that is saved and invested. The higher the savings rate, the higher the break-even level of investment, and the higher the level of capital per worker.
In conclusion, the break-even level of investment must provide capital for new workers, offset the depreciation of existing capital, and keep the level of capital per worker constant in the Solow growth model of an economy with population growth but no technological change. However, it does not have to equal the marginal productivity of capital.
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