Problem Set #10 Consider a hypothetical small Island nation in which the only industry is weaving. The following table displays information about the economy over a two year period. 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 2035 2036 Physical Capital Labor Force Physical Capital per Worker Labor Hours (Looms) (Looms) 160 180 (Workers) 40 60 4 3 (Hours) 1,800 3,900 Output (Tapestries) 14,400 23,400 Labor Productivity (Tapestries per hour of labor) 8 6 Based on your calculations, a decrease in physical capital per worker from 2035 to 2036 is associated with a decrease productivity from 2035 to 2036. 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. Offering free public education to every worker in the country Imposing a tax on looms Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Imposing restrictions on foreign ownership of domestic capital in labor
Problem Set #10 Consider a hypothetical small Island nation in which the only industry is weaving. The following table displays information about the economy over a two year period. 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 2035 2036 Physical Capital Labor Force Physical Capital per Worker Labor Hours (Looms) (Looms) 160 180 (Workers) 40 60 4 3 (Hours) 1,800 3,900 Output (Tapestries) 14,400 23,400 Labor Productivity (Tapestries per hour of labor) 8 6 Based on your calculations, a decrease in physical capital per worker from 2035 to 2036 is associated with a decrease productivity from 2035 to 2036. 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. Offering free public education to every worker in the country Imposing a tax on looms Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving Imposing restrictions on foreign ownership of domestic capital in labor
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Problem Set #10
Consider a hypothetical small Island nation in which the only industry is weaving. The following table displays Information about the economy over a
two year period.
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
2035
2036
Physical Capital Labor Force Physical Capital per Worker Labor Hours
(Looms)
(Looms)
160
180
(Workers)
40
60
(Hours)
1,800
3,900
Output
(Tapestries)
14,400
23,400
Labor Productivity
(Tapestries per hour of labor)
8
6
Based on your calculations, a decrease in physical capital per worker from 2035 to 2036 is associated with a decrease
productivity from 2035 to 2036.
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.
Offering free public education to every worker in the country
Imposing a tax on looms
Sharply increasing the interest rate on student loans to people pursuing advanced degrees in weaving
Imposing restrictions on foreign ownership of domestic capital
in labor
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