An Increase in Total Factor Productivity

question 34

Multiple Choice

An increase in total factor productivity

• A) changes neither the slope nor the position of the production function.
• B) changes the slope but not the position of the production function.
• C) changes the position but not the slope of the production function.
• D) changes both the slope and the position of the production function.
• E) keeps the marginal product of labour constant.

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Definitions:

Value-Added Tax

A consumption tax placed on a product whenever value is added at a stage of production and at the point of retail sale.

United States

A country in North America consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Sales Taxes

Taxes imposed by governments on sales of goods and services, typically calculated as a percentage of the sale price.

Digressive

Relating to or denoting a method that reduces in pace or intensity over time or steps, often used in taxation to describe tax rates that increase less proportionally with the amount subject to tax.