Question

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?

Answer 1

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.