Draw a production function and illustrate the effects of capital investment and technological improvement on labor productivity
A production function is drawn with the hours of labor input on the horizontal axis and the amount of output on the vertical axis. The production function is an upward-sloping line from the origin. As capital stock growth occurs or technological improvement takes place, the production function shifts upward. Therefore, more output is obtained from the same amount of labor input. This is the definition of increasing labor productivity: more output with the same quantity of labor input.
You might also like to view...
If economists forecast an increase in aggregate expenditure, which of the following is likely to occur?
A) GDP will fall. B) Wages will fall. C) Inventories will rise. D) GDP will rise.
Rising inflationary pressure caused the U.S. to tighten its monetary policy at the end of the 1960s
As a result, market interest rates rose above the Regulation Q ceiling and American banks found it impossible to attract time deposits for re-lending. How did the banks get around this problem? A) by setting their own interest rates and then using better business as compensation for government regulations B) by borrowing funds from European branches, which faced no restriction on the interest they could pay on Eurodollar deposits C) by pushing through new legislation that nullified Regulation Q D) by creating subsidiary branches in foreign countries E) by waiting to trade time deposits until Regulation Q no longer applied
Suppose a commodity market is initially in equilibrium. An increase in the nation's skilled labor force then lowers the marginal cost of producing each unit of output. Which of the following changes will be observed?
a. The demand curve will shift upward b. The supply curve will shift downward c. The demand curve will shift downward d. The supply curve will shift upward
To keep the U.S. dollar from depreciating against the euro, the U.S. Federal Reserve must:
a. buy euros and sell U.S. dollars. b. buy both euros and U.S. dollars. c. sell euros and buy U.S. dollars. d. sell both euros and U.S. dollars. e. buy U.S. government bonds