Discussion
According to Hicks, a neutral invention is when :
Answer: B
A Hicks-neutral invention raises the marginal productivities of labour and capital in the same proportion.
Hicks classified technical progress by its effect on the ratio of the marginal products of capital and labour at a given capital-labour ratio. If both marginal products rise in the same proportion, their ratio, and hence relative factor shares at given factor proportions, is unchanged: the invention is neutral. If it raises the marginal product of capital more, it is labour-saving, and vice versa.
Equal growth in saving and investment, balanced sectoral development or no effect on the economy are not Hicks's definition.
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