Suppose that labor productivity in one economy is higher than it is in some other economy. Does that mean that the first economy is using its productive resources better than the second economy? Explain
What will be an ideal response?
Higher labor productivity does not necessarily mean better use of resources. The economy may have more capital per worker, but the productivity of capital may be higher in the second economy. To compare use of resources across economies or over time, the correct measure is total factor productivity.
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In terms of a nation's production possibilities frontier, what impact does international trade have?
A) International trade shifts the nation's production possibilities frontier outward. B) International trade shifts the nation's production possibilities frontier inward. C) International trade allows the nation to consume at a point outside its production possibilities frontier. D) International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. E) International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported.
Rationality implies that in order to get what they want, people will spend the most time and effort
a. making private market decisions b. getting politically involved c. investigating political candidates' platforms d. debating social issues e. writing to Congress