Question

After "Black death", output and capital per worker increased, what was the impact of the increase in technology? And why does tech change cause investment if the return on capital is constant?

Answer 1

Black death meant the same epidemic situation of an out break of plague similar to what we are experiencing now with Corona virus. It was ended by people under going quarantine. The largely affected the population. Output and per capita increased based on the development of technology. Technology helped to yield better output with less labourers which helps in continuous increase in output ahead of population.

This technology development is the capital investment to be initiated to get better yield but it is fixed investment and based on the theory of law of diminishing returns to scale after a time period the output will start to decline hence investment is required and Carried out even if return on capital becomes constant