Quiz_222 - SHORTANSWER. 64 ,evenif .Provideagraphofaper-worker productionfunctiont

Quiz_222 - SHORTANSWER. 64 ,evenif...

This preview shows page 1 - 3 out of 4 pages.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 64) Explain how advances in technology are critical to sustaining economic growth, even if capital per hour worked is consistently increasing. Provide a graph of a per-workerproduction function to support your answer.64)Answer: As the level of capital per hour worked increases, an economy moves along theper-worker production function toward higher levels of real GDP per hour worked.However, diminishing returns imply that successive increases in capital per hourwork increase real GDP per hour worked at a decreasing rate. As shown in thegraph below, moving from pointAto pointBimplies an increase in capital per hourworked. As a result, real GDP per hour worked increases from $780 to $800 (anincrease of $20). Moving from pointBto pointCimplies a similar increase incapital per hour worked, but real GDP per hour worked increases from $800 to $810(an increase of only $10). Without technological change that shifts the per-workerproduction function upward, continual growth in real GDP per hour workedcannot be sustained even if capital per hour worked continues to increase.Diff: 2Page Ref: 719-720/313-314Topic: Per-Worker Production FunctionLearning Outcome: Macro 4: Explain the sources of productivity growthAACSB: Analytic Skills16
Background image
65) Starting at pointBin the diagram below, identify which combinations of points illustratetechnological change. Give a brief explanation to support your answer.65)Answer: The movement fromBtoDin the diagram illustrates technological change.Technological change is constant along a given production function. Technologicalchange will shift the production function up as more output is produced ($17,000GDP per hour vs. $16,000 GDP per hour) with the same amount of capital per hourworked ($60,000).
Background image
Image of page 3

You've reached the end of your free preview.

Want to read all 4 pages?

  • Spring '11
  • Lee
  • Economics, Prime number, AACSB, Page Ref

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes