4. Productivity and growth policies Consider a small island country whose only i

Question

4. Productivity and growth policies Consider a small island country whose only industry is fishing. 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 labour 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 labour Physical Capitl Labour Force Physical Capital per Worker Labour Hours OutputLabour Productivity Year (Fishing poles) (Workers) 2025 2026 (Fishing poles) (Hours) 2,000 3,900 (Fish) 20,000 29,250 (Fish per hour of labour) 160 40 180 60 Based on your calculations, productivity from 2025 to 2026. in physical capital per worker from 2025 to 2026 is associated with in labour Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the fishing industry? Check all that apply Subsidizing research and development into new fishing Imposing a tax on fishing poles Imposing restrictions on foreign ownership of domestic capital Offering free public education to every worker in the country

Explanation / Answer

Answer to blank 1: Decrease

Answer to blank 2: Decrease

Ans:

Year PC LF PCPW LH O LP 2025 160 40 4 (i.e. 160/40) 2000 20000 10 (i.e. 20000/2000) 2026 180 60 3 (i.e. 180/60) 3900 29250 7.5 (i.e. 29250/3900)

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