Economics: Principles & Policy
14th Edition
ISBN: 9781337912679
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning US
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Question
Chapter 22, Problem 2TY
To determine
The change in output.
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If output rises by 35 percent while hours of work increase by 40 percent, has productivity increased or decreased? By how much?
What correlation lies between productivity and the standard of living?
Assume there are 100 workers and each worker produces 100 outputs. If the workforce is growing by 1% a year but productivity does not improve, how fast can output increase?
Chapter 22 Solutions
Economics: Principles & Policy
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- Barcode technology spurred a lot of investment in retailing.How did it alter the retailing production function?What would a similar amount of investment have accomplised without the new technology?arrow_forwardIn the very long run, what are the major factors that are responsible for growth in potential output or GDP? Use the production function to support your answer.arrow_forwardIf a nation’s productivity grows by 3 percent rather than 1.5 percent over many years, what will be the difference in the nation’s standard of living? Explain.arrow_forward
- why do economist believe there is a strong correlation between productivity and the standard of living?arrow_forwardHow is it possible for labor productivity to increase if output is falling?arrow_forwardToyota contemplating whether to increase production of SUVs based on future consumer demand. Is that micro or macro?arrow_forward
- Suppose that Indonesia's national production function is Y = K 05L 05, where K is the amount of land and Lis the amount of labor. The economy starts when the amount of land owned is 100 units and the number of workers is 100 units. Calculate the following indicators. a. How much output is produced? b. What are the labor wages and land rent? c. What is the share of the output received by labor? d. If a natural disaster occurs that causes the population to be reduced by half, what is the new level of national output? e. What are the new rates of labor wages and land rent? f. What share of output does the labor receive now?arrow_forwardIs it possible for GDP to rise while at the same time per capita GDP is falling? Is it possible for GDP to fall while per capita GDP is rising?arrow_forwardAn increase in labor productivity means businesses will produce more output with the same amount of labor. Explainarrow_forward
- Describe the various components of fluctuations in economic activity over time. Because economic activity fluctuates, how is long-term growth possible?arrow_forwardIf two economies are identical, except the savings rate in one economy is higher, explain why we might expect the economy with the higher savings rate to grow faster and in that sense be healthier.arrow_forwardGo to a recent issue of The Economist magazine. In the back of each issue is a section called “economic indicators.” That section lists the most recent growth data for a substantial number of countries. Which countries around the world are growing most rapidly according to the most recent data? Which countries around the world are growing more slowly? Flip through the stories in The Economist to see if there is any explanation for the pattern that you observe. Write a brief essay on current general economic conditions around the world.arrow_forward
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