What is inada condition in economics?

Answer 1

The Inada conditions are a set of assumptions in economics, particularly in the context of production functions and growth models, that ensure certain behaviors of capital accumulation and labor. Specifically, they state that the marginal product of capital and labor must approach infinity as their respective inputs approach zero, and must approach zero as the inputs approach infinity. These conditions help to guarantee that there is a unique steady-state equilibrium in growth models, ensuring that the economy does not reach unsustainable levels of production or consumption. They are crucial for ensuring the stability and feasibility of long-term economic growth.