Question

1. The effect of technological change on the long run aggregate production function curve is to:

   	A.	move to a point further to the left on the same curve
   	B.	move to a point further to the right on the same curve
   	C.	cause the curve to shift downward
   	D.	cause the curve to shift upward
   	E.	change the shape of the curve so that the slope is positive and increasing rather than constant

Answer 1

Since there are four factors of production, land, labor, capital and entrepreneur.

So an entrepreneur use his money for purchasing land, labor and capital and produces some output and sell in the market and earn surplus value.

The production functions shows the functional relationship between inputs and outputs.

Q=f(K,L)

Since in the long-run all factors of production will be variable and production function will shifts upward when there is a technological change.

Hence option D is the correct answer.