Using the textbook's production function,an increase in A requires that one percent more labor working with ________ capital produces more ________.
A)an unchanged amount of,real GDP
B)an unchanged amount of,real GDP per labor input
C)one percent more,real GDP
D)one percent more,real GDP per labor input

Question

Quizplus · Accepted Answer

According to the production function in the textbook, an increase in A (total factor productivity) requires that one percent more labor working with the same amount of capital produces one percent more real GDP per labor input. This is because the production function states that real GDP is a function of labor, capital, and total factor productivity (A). Therefore, an increase in A leads to an increase in the output per unit of labor input, which is real GDP per labor input.

Using the Textbook's Production Function,an Increase in a Requires That