Productivity A, Technology T, and efficiency E are related as A=TXE.Technologica

Question

Productivity A, Technology T, and efficiency E are related as A=TXE.Technological level in G years is Tg=T0(1+g)^G, where g is the rate of technological growth. The level of productivity A in Country X, relative to the Country Y, is 0.6.The growth rate of technology in Country X is 3% per year.Country X lags behind the Country Y in terms of technology by 10 years. 1)What is the level of efficiency in Country X relative to the Country Y? 2)Many governments subsidize vaccinations against infectious diseases or require that children be vaccinated before attending school. A)Coordination B)Externalities C)Monopolies D)Income Redistribution 3)In the distance learning technology environment, a single professor can teach students at dozens or even hundreds of colleges and universities.How such a technological change would affect the distribution of income among professor? A)Income inequality among professors will increase B)Income inequality among professors will decrease C)Income inequality among professors will not be affected.

Explanation / Answer

2) B) Externalities because infectious disease will create cost for the other students in the school. So vaccination protect other students from infection and it will reduce externality problem. Externality occurs when action of one economic agent creates benefit or cost for the others.

3) B)Income inequality among professors will decrease.

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