An increase in total factor productivity causes the Question 9 options: 1) production function to shift...

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Question

An increase in total factor productivity causes the Question 9 options: 1) production function to shift...

An increase in total factor productivity causes the

Question 9 options:

1)	production function to shift up, labour demand to shift right, and output supply to shift right.

2)	production function to shift up, labour demand to shift left, and output supply to shift right.

3)	production function to shift up, labour demand to shift right, and output supply to shift left.

4)	production function to shift down, labour demand to shift left, and output supply to shift left.

5)	production function to shift down, labour demand to shift right, and output supply to shift right.

business economics

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Answer 1

Answer #1

2) production function to shift up, labour demand to shift left, and output supply to shift right.

Total factor productivity represents increase in total production which shifts production function curve upwards or shifts up. Technological change, education, research and development are the factors which shifts production function.

Increase in total factor productivity increases supply of output which shifts supply curve rightwards. Labor demand decreases because productivity of existing workers increases which increases output.

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Answer 2

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An increase in total factor productivity causes the Question 9 options: 1) production function to shift...

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