The Next Questions Refer to the Following

question 25

Multiple Choice

The next questions refer to the following.
Suppose the economy has TFP = 10, there are 400 hours worked, and 60 unit of capital and 210 units of land the Cobb-Douglas production function is:
Output = TFP x Hours^0.3 x Capital^0.3 x Land^0.2.
-If total factor productivity grows by 1% per year while capital and labor each grow by 2% per year,then output grows by

• A) 2.2% per year
• B) 3% per year
• C) 5% per year
• D) 1.67% per year
• E) 4% per year

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Definitions:

Finishing Department

The section in a manufacturing process where products are completed, tested, and prepared for delivery.

Predetermined Overhead Rate

An estimated charge used to apply manufacturing indirect costs to individual products or job orders, based on a chosen activity base.

Direct Labor-Hours

A measure of the work time spent by employees directly involved in the production of goods or services.

Machine-Hours

A measurement of production output or activity based on the number of hours machines are operated in the manufacturing process.