If the Number of Worker-Hours in an Economy Is 100

question 7

Multiple Choice

If the number of worker-hours in an economy is 100 and its labour productivity is 5 units of output per worker-hour, the economy's real GDP:

• A)is $20.
• B)is $500.
• C)is $5000.
• D)cannot be calculated.

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Definitions:

Returns to Scale

The rate at which production output increases as a result of a proportional increase in all inputs.

Isoquants

Curves that represent combinations of different inputs that yield the same output, used in production theory to analyze input choices.

Inputs

The resources used in the production process to produce goods or services, including labor, materials, and capital.

Production Function

An equation that describes the relationship between inputs (like labor and capital) and the quantity of output produced.