You will demonstrate the importance of diminishing returns to capital in the Solow-Swan

model. Draw a Solow-Swan diagram in which there are constant returns to capital. This

would happen if the production function were Yt = AKt, where A = 1. Furthermore,

assume that the sum of population growth and the depreciation rate is greater than the

saving rate. Does the economy converge to a steady state in this case? To answer this

question, you should draw a Solow-Swan diagram in terms of output per person, as we did

in class. Use this diagram to explain why the economy converges to a steady state or not.