Using the textbook's production function,if two percent more labor working with two percent more capital produces two percent more real GDP,then "multifactor productivity" has
A)risen by four percent.
B)risen by two percent.
C)remained unchanged.
D)fallen by one percent.
E)fallen by two percent.

Question

Quizplus · Accepted Answer

Multifactor productivity is a measure of how efficiently labor and capital are being combined to produce output, independent of the increases in labor and capital inputs. If a two percent increase in both labor and capital inputs leads to a two percent increase in output, then there has been no change in multifactor productivity. This means that the increase in output can be entirely attributed to the increase in inputs, with no improvement in efficiency or technology.

Using the Textbook's Production Function,if Two Percent More Labor Working