A Small Country Has an Aggregate Production Function Given by Y

question 18

Multiple Choice

A small country has an aggregate production function given by Y = AK1/2. What would need to happen to its aggregate production function in order to represent an advancement in technology?

• A) Capital would need to increase.
• B) The variable A would need to increase.
• C) The variable A would need to decrease.
• D) Capital would need to decrease.

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Definitions:

Direct Labor Cost

The wages and benefits paid to workers who are directly involved in the production of goods.

Equivalent Units

A term used in cost accounting to represent a conversion of partially completed goods into a number of fully completed units.

Direct Materials

Raw materials that are directly traceable to the production of a specific good or service and directly incorporated into the final product.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or the provision of services.