Question

Farm Country and Industry Country are two neighboring countries. Both countries produce only one​ good: good X. Production in both countries is a function of total efficiency units of labor and physical capital stock. The aggregate production functions will shift upward when​ ________ produce(s) a higher output.

Answer 1

B) the same amount of capital and labor

Step-by-step explanation:

Only an increase in productivity shifts the production function upward given that all factors of production remain the same. Generally technology improves productivity and causes those shifts.

Productivity measures the rate of output per unit of input. E.g. I write 10 pages per hour. If my writing productivity increases, I will write 12 pages per hour. Labor productivity is measured by the amount of output produced per hour worked.