Redland produced 10 million tonnes of wheat in a certain year using a given stock of capital and efficiency units of labor
It was able to increase production to 15 million tonnes within two years without any increase in its capital stock or the number of efficiency units of labor. Suppose wheat is the only good produced in Redland. What is likely to be the reason behind the increase in production? Explain with a suitable diagram.
An improvement in technology enables an economy to produce a higher amount of output from the same amount of capital stock and labor. Thus, an improvement in technology is the reason behind Redland's increased output. Such an improvement in technology causes an economy's aggregate production function to shift up as shown in the diagram below:
You might also like to view...
If the minimum wage is above the equilibrium wage rate, then an increase in the minimum wage ________ employment and ________ unemployment
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases E) does not change; increases
The delay between the time a policy is enacted and the time the policy has its effect on the economy is called
A) the impact lag. B) the implementation lag. C) the government lag. D) the recognition lag.