Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 25, Problem 6SPPA
To determine
To explain:
The way advancements in technology can affect labor productivity, show graphically whether there is an increase in the diminishing returns and give example of technological advancements.
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What is the impact of a fall in productivity on costs. Explain further.
True or False
A production function in "economics" summarizes the technological relationship between inputs and outputs.
Consider the per-worker production function graph.
If there is an increase in capital per hour worked, holding technology constant, then
A. there is a movement from A to B.
B. there is a movement from A to C.
C. there is a movement from B to D.
D. there is a movement from D to C.
If there is an increase in technology, holding constant the quantity of capital per hour worked, then
A. there is a movement from C to D.
B. there is a movement from A to B.
C. there is a movement from D to B.
D. there is a movement from A to C.
C
Real GDP per hour worked (Y/L)
10-
Y/L2
Y/L₁
Per-Worker
Production Function
C
3
B
Per Worker
Production Function 1
K/L₁
K/L₂
Capital per hour worked (K/L)
10
Chapter 25 Solutions
Foundations of Economics (8th Edition)
Ch. 25 - Prob. 1SPPACh. 25 - Prob. 2SPPACh. 25 - Prob. 3SPPACh. 25 - Prob. 4SPPACh. 25 - Prob. 5SPPACh. 25 - Prob. 6SPPACh. 25 - Prob. 7SPPACh. 25 - Prob. 8SPPACh. 25 - Prob. 9SPPACh. 25 - Prob. 10SPPA
Ch. 25 - Prob. 11SPPACh. 25 - Prob. 12SPPACh. 25 - Prob. 1IAPACh. 25 - Prob. 2IAPACh. 25 - Prob. 3IAPACh. 25 - Prob. 4IAPACh. 25 - Prob. 5IAPACh. 25 - Prob. 6IAPACh. 25 - Prob. 7IAPACh. 25 - Prob. 8IAPACh. 25 - Prob. 9IAPACh. 25 - Prob. 10IAPACh. 25 - Prob. 1MCQCh. 25 - Prob. 2MCQCh. 25 - Prob. 3MCQCh. 25 - Prob. 4MCQCh. 25 - Prob. 5MCQCh. 25 - Prob. 6MCQCh. 25 - Prob. 7MCQCh. 25 - Prob. 8MCQ
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- For each of the following, identify which inputs into the production function changed(i.e., Physical Capital, Human Capital, or Labor). Also identify whether this phenomenon will increase or decrease economic growth.(a) The government increases federal aid for students to go to college.(b) States embark on a program to increase charging networks for electric cars.(c) A big chunk of the population decides to drop out of the workforce to spend moretime playing video games.arrow_forwardWriting in 1776, Adam Smith was concerned not only with the profound effects of the division of labor on productivity (as your textbook notes) but also its stultifying effect on the human capacity. InThe Wealth of Nations, Smith warned that performing a few simple operations over and over again could render any worker, no matter his or her native intelligence, “stupid and ignorant.” a. Does the division of labor in today’s economy continue to have both these effects? b. What are the policy implications? (Radical)arrow_forwardAnswer the attached questionarrow_forward
- Which of the following is an example of technology as the responsible determinant of productivity in the economy of Canada? Oon-the-job experience a) terrain in Ontario that contains large deposits of nickel is discovered O the city of Sarnia announces the opening of a solar panel factory newly invented laser saws are introduced in the diamond industryarrow_forward0.5 0.5 Given a production function: Y = AK N If output grows at 5%, capital grows at 2% and the number of workers grows at 4%, then technology (or total factor productivity) grows at % ? (Answer in integer only, no decimal place.) Your Answer: Answer Given a production function: Y = AK0.5 N0.5. If output grows at 5%, capital grows at 2% and the number of workers grows at 4%, then technology (or total factor productivity) grows at %? (Answer in integer only, no decimal place.) Your Answer: Answerarrow_forwardAssume that a country's production function is Y = K/2*L/2 and there is no population growth or technological change. a. What is the per-worker production function y = f (k)? b. Assume that the country possesses 40,000 units of capital and 10,000 units of labor. What is Y? What is labor productivity computed from the per-worker production function? Is this value the same as labor productivity computed from the original production function? c. Assume that 10 percent of capital depreciates each year. What gross saving rate is necessary to make the given capital-labor ratio the steady-state capital-labor ratio? (Hint: In a steady state with no population growth or technological change, the saving rate multiplied by per-worker output must equal the depreciation rate multiplied by the capital- labor ratio.)arrow_forward
- 1:11 Search < Notes In what specific ways (if any) does a college education increase a worker's productivity? Why do you think employers possibly favor someone with a college educationarrow_forwardThe concept of diminishing returns to a factor of production applies not only to capital but to labor as well. Prior to the Industrial Revolution, there was no sustained growth in living standards. Draw a graph to illustrate the relationship between population and output produced, where population is measured on the horizontal axis, both pre- and post-Industrial Revolution. 1.) Using the 3-point curve drawing tool, draw the production curve showing diminishing returns to labor. Label your curve 'Pre.' 2.) Using the 3-point curve drawing tool, draw the production curve after the Industrial Revolution. Label your curve 'Post. Carefully follow the instructions above and only draw the required objects. aarrow_forwardPlease no written by hand and graph Consider a small world that consists of two different countries, a developed and a developing country. In both countries, assume that the production function takes the following form: Y = F (K, LE) = K¹/4 (LE) 3/4, where Y is output, K is capital stock, L is total employment and E is labour augmenting technology. (a) Does this production function exhibit constant returns to scale in K and L? Explain. (b) Express the above production function in its intensive form (i.e., output per-effective worker y as a function of capital per effective worker k). (c) Solve for the steady-state value of y as a function of saving rate s, population growth rate n, technological progress g, and capital depreciation rate 6. (d) The developed country has a savings rate of 30% and a population growth rate of 2% per year. Meanwhile, the developing country has a savings rate of 15% and population growth rate of 5% a year. Technology evolves at the rate of 8% and 2% in…arrow_forward
- The graph below represents per-worker production functions for the same country. Answer the following questions using this graph. Which 1 concept explains that the area between B and C has a flatter slope than the area between A and B? Answer: Law of Diminishing Marginal Returns What has to happen for a country to move from point E to B to D? Answer: The movement through which 3 points (out of 5 given) would indicate the largest increase in productivity? Answer:arrow_forwardis it true labor productivity is the activity measures output per labor hour per employee?arrow_forward"If the law of diminishing returns did not hold, we can produce all the food the world needs in one small patch of land." Do you agree, disagree, or agree in part? Think of land as the only fixed factor and fertilizer as the only variable factor. How much food could you grow in the patch of land if the marginal product of fertilizer were constant regardless of the amount used per unit of land?arrow_forward
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