Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4.Refer to the above information.All else equal, if the price of each input increased from $4 to $6, productivity would:
A)fall from 2 to 3.
B)fall from .50 to .33.
C)rise from 1 to 2.
D)remain unchanged.

Question

Quizplus · Accepted Answer

Productivity is calculated as output per unit of input. Since the quantity of inputs and output remain unchanged, productivity remains unchanged regardless of the input price change.

Suppose That Real Domestic Output in an Economy Is 20