An increase in total factor productivity will lead to which of the following? An increase in...

An increase in total factor productivity will lead to which of the following?

		An increase in the productivity of labor but not capital.
		A decrease in the productivity of capital, but not labor.
		An increase in the productivity of labor and capital.
		A decrease in the productivity of labor, but not capital.

Expert Solution

ANSWER:

Increase in Total factor productivity means increase in output when inputs are not increased. Which means productivity of input is increased as with same inputs output is increased

There are two types of input labor and capital they can also be called as factors of production. So, any increase in output without increasing input will lead to increase in productivity.

Or, it can be said that if productivity increases the productivity of labor and capital will aslo be incrreased.

The statement given in question "An increase in total factor productivity will lead to" the answer is An increase in the productivity of labor and capital.

As when total factor productivity increases (which means increases in output with input remaining same) it will only lead to An increase in the productivity of labor and capital.

Rahul Sunny answered 2 years ago

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