Final answer:
The correct answer is b. Golden Rule capital-labor ratio, which describes the optimal level of capital intensity that allows for the highest sustainable level of consumption per worker in an economy in the long run.
Step-by-step explanation:
The level of the capital-labor ratio that maximizes consumption per worker in the steady state is known as the Golden Rule capital-labor ratio. This concept is derived from the Solow growth model, which analyzes the relationship between economic growth, capital accumulation, and productivity
When a firm operates at the Golden Rule level of capital intensity, it strikes a balance between the amount of capital that can be reinvested in the economy and the consumption needs of the workers, leading to the maximum sustainable level of consumption per worker over time. This Golden Rule capital-labor ratio is considered an optimal point where the long run production function is as efficient as possible, which means all the factors of production, including capital and labor, are utilized in a way that maximizes per capita output without causing diminishing returns.