Final answer:
The term for the transition from increasing to diminishing returns on the technology S-curve is 'diminishing marginal returns.' This occurs when economies solely rely on capital deepening but can be offset by integrating technological improvements with capital investment, allowing sustained economic growth.
Step-by-step explanation:
The term used to describe the point in time on the technology S-curve when the performance and/or functionality of desired attributes transitions from an increasing to a diminishing return on investment is known as the point of diminishing marginal returns. In the context of economic growth and technology, if an economy relies solely on capital deepening (increasing capital per worker), it will experience diminishing returns as it moves along the curve (from point R to U to W). However, when capital deepening is combined with technological improvements (from Technology 1 to 2 to 3), the economy can continually move from point R to S and then to T, thereby offsetting the diminishing returns with technological advancements.
This mechanism allows for sustainable economic growth as productivity increases without necessarily facing slowdowns due to the diminishing contributions of additional capital. With each technological leap, such as from Technology 1 to Technology 2, there is a possibility to reinvent the production process, yielding higher output levels and efficiency gains. Technological innovations lead to new products and processes that can utilize the existing and new capital more effectively, thus maintaining economic momentum and potentially breaking through previous limitations.