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6 February, 13:47

Q2. What two kinds of changes in the capital stock can improve labor productivity? How can each type be illustrated with a per-worker production function? What determines the slope of the per-worker production function?

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  1. 6 February, 14:51
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    A. 1. By increasing the quantity of capital and

    2. By also improving the quality of capital.

    B. Quantity increases - is being represented by the movement along a per - worker production function's curve.

    Quality improvements are being illustrated by the upward rotation in the curve by graph.

    C. The per-worker production function has a slope or slopes upward bc, the more capital given per worker increases output per worker.

    - when more capital is been added, the curve becomes less steep due to the law of diminishing marginal returns.
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