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CC2105+(T4[1].Ch.12)+Answers

CC2105+(T4[1].Ch.12)+Answers - ShortAnswer 1...

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Short Answer 1. Use the data below to find out the growth of income per person (over the entire period, not an annual basis) between the two  years listed. 69
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Chapter 12/Production and Growth 70 Year Real GDP (1996 prices) population 1982 $4,915,600 million 233 million
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Chapter 12/Production and Growth 71 2000 $9,243,800 million 283.5 million ANSWER: Income per person in 1982 was $4,915,600/233 = about $21,097. Income per person in 1999 was $9,243,800/283.5 = about  $32,606. Income per person grew by (32,606 – 21,097)/21,097 = about 54.5 percent. 2. Why is productivity related to the standard of living? In your answer be sure to explain what productivity and standard of living  mean. Make a list of things that determine labor productivity. ANSWER: The standard of living is a measure of how well people live. Income per person is an important dimension of the standard  of living and is positively correlated with other things such as nutrition and life expectancy that make people better off.  Productivity measures how much people can produce in an hour. As productivity increases, people can produce more (and use  less to produce the same amount) and so their standard of living increases. The factors that determine labor productivity include the amounts of physical capital (equipment and structures), human  capital (knowledge and skills), and natural resources available to workers, as well as the state of technological knowledge in  society. 3. What is a production function? Write an equation for a typical production function, and explain what each of the terms  represents. ANSWER: a production function is a mathematical representation of the relationship between the quantity of inputs used in production  and the quantity of output from production. A typical production function could be written as Y = A F(L, K, H, N), where Y 
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