Question

The Per-worker production function shows the relationship between the amount of output per worker and capital per worker. This curve is not linear but increases at a decreasing rate. Why?

If a worker has more and more capital, the additional capital will not be used as well as the previous capital, resulting in a smaller increase in output than previous units of capital.

Too much capital will result in inefficient production

If a worker has more capital, that worker will see a reduction in productivity.

If a worker is provided more and more capital, the output of additional units of capital increase because of the ability to use each unit more effectively, increasing output compared to previous units of capital.

Economists care a lot about economic productivity and economic growth. What is the difference between the two?

These variables are very related; productivity measures the amount of output for a certain amount of input and economic growth refers to the rate of change in real production of goods and services in the short or long run.

These variables are not related; productivity measures the amount we can produce while growth measures the expansion of money in the economy.

These variables are identical; productivity and growth are literally synonyms that mean more total output.

productivity refers to the wages of all the workers in the economy while growth refers to the aggregate income in the economy

Answer 1

1).

Now, the per worker production function shows the relationship between “Y/L” and “K/L” and it is concave to the origin, => as more and more “k” increases, => the additional production form additional capital decreases.

Since additional “K” is not use as efficiently as compared to the previous one, => smaller increase in output than previous of capital. So, “1” be the correct option.

2).

Productivity and growth related to each other. The “productivity” means increase in “Y” due to 1 unit increase in any input on the other hand growth implied percentage change in real output.

So, the “1^st“ option is correct.