The Per Person Production Function Representing Both Physical Capital Per

question 18

Multiple Choice

The per person production function representing both physical capital per person (K/N) and human capital per person (H/N) is

• A)Y/N = (K/N)b(H/N)c.
• B)Y/N = (K/N)b + (H/N)c.
• C)Y/N = (K/N)b - (H/N)c.
• D)Y/N = (K/N)b/(H/N)c.

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Definitions:

Ideal Economic Efficiency

A state where resources are allocated in the most efficient way possible, maximizing total net benefit to society or economy.

Government Failure

Situations where government interventions in the economy lead to inefficient outcomes, worsening the problem they intended to solve.

Efficient Allocation

The optimal distribution of resources among competing uses, aiming to maximize the overall benefit or utility from those resources.

Government Failure

A situation where government intervention in the economy causes inefficiencies or leads to an allocation of resources worse than the free market.