Question

In: Economics

a) Please calculate the Total Factor Productivity of a countryfor a year with the following...

a) Please calculate the Total Factor Productivity of a country for a year with the following data on Real GDP of the country along with other required information:

Y   = $ 2,000 billion

L   =     40 billion hours

K   = $ 10, 000 billion

α   = 0.7

b) If the labour force increases by 20%, how it will affect the total factor productivity?

Solutions

Expert Solution

(a) Total factor productivity = (Y​​​​​​t / L​​​​​​t )(1-a) (Y​​​​​​t / K​​​​​​t )(a)

= (2000/40)(1-0.7) (2,000/10,000)(0.7) = 50(0.3) 0.2 (0.7) = 3.2336 × 0.3241 = 1.048

Hence Total factor productivity is 1.048.

(b) labour increased by 20% hence now labour is equal to 40 + 20% of 40 = 40 + 8 = 48 billion hours

Now Total factor productivity = (2000/48) (0.3) + (2000/10000)(0.7) = 41.67 (0.3) 0.2 (0.7) = 3.0616 × 0.3241 = 0.992

Hence Total factor productivity is 0.992.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

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.
Question 3 Define “productivity”. Compare single factor productivity measure with total factor productivity measure. What do...
Question 3 Define “productivity”. Compare single factor productivity measure with total factor productivity measure. What do we mean when we say productivity is a “relative” measure? Various financial data for the past two years follow. Calculate the total factor productivity and the single-factor productivity measures for labor, capital, and raw materials for this company for both years. What do these measures tell you about this company? Last Year This Year Output: Sales $201,005 $202,015 Inputs: Labor $30,010 $40,010 Raw materials...
1) Which of the following things would increase the value of Total Factor Productivity (TFP)? Select...
1) Which of the following things would increase the value of Total Factor Productivity (TFP)? Select one: a. A new production method that can produce smaller, more efficient microchips. b. None of the other answers. c. A company hires a large amount of workers after building a brand new factory. d. Foreign investors invest in physical capital. 2) The country of Rupertopia has one factory for all its workers in 2011 and 2012. There were 100 workers in 2011 and...
On the Solow model, are z(Solow residual) and Total Factor Productivity the same?
On the Solow model, are z(Solow residual) and Total Factor Productivity the same? Or different? Please explain.
In real business cycle theory, the persistence of shocks to total factor productivity is justified by
In real business cycle theory, the persistence of shocks to total factor productivity is justified byathe fact that capital takes time to build.bthe fact that capital depreciates every period.cthe behavior of Solow residuals in the data.dthe fact that monetary policy can be neutral.
Suppose that the (total factor) productivity level A can be broken down into a technology level...
Suppose that the (total factor) productivity level A can be broken down into a technology level T and efficiency level E as follows: A = T ?E. In the USA, the average growth rate of A is 0.81% per year while the efficiency level does not change. Productivity in Canada is 77% that of the USA. Suppose that Canada is five years behind the USA in terms of technology. What is the efficiency level in Canada relative to the USA?
One of key predictions of the Solow Growth Model is that growth in total factor productivity...
One of key predictions of the Solow Growth Model is that growth in total factor productivity will ensure long run economic growth. While Canada has been making progress in terms of a growing technology sector due to many factors, some of which include: strong economic base and rising standard of living highly educated work force multi-cultural mix and friendly business environment universal health care foreign immigration policies friendly domestic immigration policy and foreign anti-immigration policies Discuss some public policies that...
One of key predictions of the Solow Growth Model is that growth in total factor productivity...
One of key predictions of the Solow Growth Model is that growth in total factor productivity will ensure long run economic growth. While Canada has been making progress in terms of a growing technology sector due to many factors, some of which include: strong economic base and rising standard of living highly educated work force multi-cultural mix and friendly business environment universal health care foreign immigration policies friendly domestic immigration policy and foreign anti-immigration policies Discuss three public policies (in...
Consider the following aggregate production function: Y=100×L×K, where A is the total factor productivity, K is...
Consider the following aggregate production function: Y=100×L×K, where A is the total factor productivity, K is the amount of capital in the economy, L is the labour force, and Y is the GDP. Is this aggregate production function exhibiting the constant returns to scale? Explain how you know. (2) Is this aggregate production function exhibiting the diminishing marginal product of capital? Explain how you know. (2) In 1867, the government employed 6% of the country’s workers. Since then, the country’s...
Explain why employment may rise or fall in response to an increase in total factor productivity....
Explain why employment may rise or fall in response to an increase in total factor productivity. A. An increase in total factor productivity causes the PPF to become steeper at any given quantity of leisure but also to shift​ down, and the relative magnitudes of these shifts are unknown. B. An increase in total factor productivity causes the PPF to become flatter at any given quantity of leisure but also to shift​ up, and the relative magnitudes of these shifts...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT