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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Explain numerically how an advance in technology can lead to more output, or Real GDP.

To determine

Role of advance in technology for increase GDP.

Explanation

Production functions explain the relationship between input and output. The production function is as follows, where ‘A’ is the technological coefficient, ‘L’ is the number of labors, and ‘K’ is the capital.

Output=A(L,K)

If the value of labor (L) and capital (K) is equal to 5 and Technology (A) is 2, the output can be calculated as follows:

Output=2(5+5)=2×10=20

The output is 20 units

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