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Question Completion Status QUESTIONS Consider two countries, labeled 1 and 2. Each has the production function Y-A;K13L13,-1,
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Answer: Country 1 will produce more than country 2, ceteris paribus

A is a measure of total factor productivity. It refers to the technological aspect in production. When a country has a higher A, it means that it has an improved technology that ensure efficient supply. Efficient supply implies same quantity produced at a lower cost. Hence, the supply increases. Keeping the price constant, when the cost of production decreases, the country's profit increases. This will induce producers to produce more. Thus, a higher A implies higher productivity.

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