Consider the production function Y₁ = A₂K¹/21/2where A is total factor productivity (TFP), Lt is the labour force, and K is physical capital. If the growth rate of capital per worker is 3% per year and the growth rate of output per worker is 3% per year, the growth rate of TFP is?

Consider the production function Y₁ = A₂K¹/21/2where A is total factor productivity (TFP), Lt is the labour force, and K is physical capital. If the growth rate of capital per worker is 3% per year and the growth rate of output per worker is 3% per year, the growth rate of TFP is?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

-1
Consider the production function Y₁ = A₁K¹/2L1/2 where A is total factor
productivity (TFP), It is the labour force, and K is physical capital. If the growth rate
of capital per worker is 3% per year and the growth rate of output per worker is 3%
per year, the growth rate of TFP is?
1.5% per year
Unsure, it depends on the growth rate of the labour force
0.5% per year
O 1.0% per year

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