Consider a small island country whose only industry is weaving. The following table shows information about the small economy in two different years. Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Year Physical Capital Labor Force Physical Capital per Worker Labor Hours Output Labor Productivity (Looms) (Workers) (Looms) (Hours) (Garments) (Garments per hour of labor) 2016 160 40 2,000 20,000 2017 180 60 3,900 29,250 Based on your calculations,__in physical capital per worker from 2016 to 2017 is associated with_in labor productivity from 2016 to 2017. Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the weaving industry? Check all that apply. Imposing a tax on looms Offering free public education to every worker in the country Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts Subsidizing research and development into new weaving technologies

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a small island country whose only industry is weaving. The following table shows information about the small economy in two different years.

Complete the table by calculating physical capital per worker as well as labor productivity.

Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor.

Year	Physical Capital	Labor Force	Physical Capital per Worker	Labor Hours	Output
(Looms)	(Workers)	(Looms)	(Hours)	(Garments)	(Garments per hour of labor)
2016	160	40		2,000	20,000
2017	180	60		3,900	29,250

Based on your calculations,____________in physical capital per worker from 2016 to 2017 is associated with___________in labor productivity from 2016 to 2017.

Suppose you're in charge of establishing economic policy for this small island country.

Which of the following policies would lead to greater productivity in the weaving industry? Check all that apply.

Imposing a tax on looms

Offering free public education to every worker in the country

Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts

Subsidizing research and development into new weaving technologies

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