Suppose That Real Output Is Growing at 3 Percent, the Labor

question 85

Multiple Choice

Suppose that real output is growing at 3 percent, the labor force is growing at 2 percent, and capital stock is growing at 1 percent. If labor contributes 70 percent to real GDP and capital contributes 30 percent to total output, then the growth in total factor productivity must equal

• A) 6 percent.
• B) 4.7 percent.
• C) 1.3 percent.
• D) 0.3 percent.
• E) 0 percent.

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Definitions:

Total Cost

The aggregate expense incurred in the manufacture or delivery of a product, including all overheads.

Marginal Cost Curve

The marginal cost curve graphically represents the cost incurred in producing one additional unit of a good.

Average Fixed Cost

Represents the fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Total Cost Curve

A graphical representation showing the total cost incurred by a firm at different levels of output.