An Increase in Total Factor Productivity

question 37

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.

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Definitions:

Unemployment Rate

The fraction of the labor market actively in pursuit of work but is currently jobless.

Opportunity Cost

The expense associated with giving up the second-best choice in favor of opting for the preferred alternative in any decision-making process.

Production Possibilities Frontier

A graph that represents the highest possible production levels for two or more products, based on available inputs such as resources and labor.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, crucial in evaluating the true cost of any economic choice.