Starting at point B in the diagram below, identify which combinations of points illustrate technological change. Give a brief explanation to support your answer. Real GDP per hour worked, Y/L $17,000 16,400 16,000 15,000 $50,000 B Production function3 Production function2 Production function1 60,000 70,000 Capital per hour

Starting at point B in the diagram below, identify which combinations of points illustrate technological change. Give a brief explanation to support your answer. Real GDP per hour worked, Y/L $17,000 16,400 16,000 15,000 $50,000 B Production function3 Production function2 Production function1 60,000 70,000 Capital per hour

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 1 The first observation to be made about technical progress is that historically, the rate of growth of outputs over time has exceeded the growth rate that can be attributed to the growth in conventionally defined inputs. Letting Q = A(t) f(K, L) (1) be the production function for society's output as a whole. The term A(t) in the function represents all the influences that go into determining Q other than K (machine-hours) and L (labor-hours) so that changes in A over time represent technical progress. For this reason, A is shown as a function of dA >0 time and presumably dt ; that is, particular levels of labor and capital become more productive over time. Using equation (1) above, show: (e,«.) a) The elasticity of output with respect to capital input b) The elasticity of output with respect to labor input (e,.) c) Show that the growth rate in output can be broken into the sum of two components, that is, growth attributed to changes in inputs (K and L) and other "residual"…
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