Attempts: Average: /3 3. Productivity and growth policies Consider a small islan

Question

Attempts: Average: /3 3. Productivity and growth policies Consider a small island country whose only industry is printing. The following table shows information about the small economy in two different years. Complete the table by calculating physical capital per worker as well as labor productivity Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Physical Capital per Worker (Printing presses) Physical Capital Labor Force Labor Hours Output Labor Productivity (Hours) Books) (Books per hour of labor) Year (Printing presses) (Workers) 2013 2014 160 40 2,000 20,000 180 60 3,900 29,250 Based on your calculations, in physical capital per worker from 2013 to 2014 is associated with in labor productivity from 2013 to 2014 Suppose you're in charge of establishing economic policy for this small island country

Explanation / Answer

Ans:

Physical capital per worker = Physical capital / workers

Labor productivity = Output / labor hours

1) Table showing Physical capital per worker and Labor productivity

2) Decrease in Physical capital per worker from 2013 to 2014 is assciated with Decrease in Labor productivity from 2013 to 2014.

3) Following will apply

Subsidizing research and development into new printing technologies.

In order to increase productivity in the printing industry a policy for subsidizing research and development into new printing technologies would be of great help since new technology will increase the productivity.

Year Physical capital Labor force Physical capital per worker Labor hours Output Labor productivity 2013 160 40 4 2000 20,000 10 2014 180 60 3 3900 29,250 7.5

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