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

Question

3. Productivity and growth policies Consider a small island country whose only industry is weaving. The following table shows information about the small economy in two different years. Complete the table by calculating physical capital per worker as wel 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 (Looms) 400 280 Labor Force (Workers) 100 140 Physical Capital per Worker (Looms) Labor Hours (Hours) 5,500 9,100 Output (Garments) 27,500 22,750 Labor Productivity (Garments per hour of labor) 2024 2025 2.5 in labor Based on your calculations, productivity from 2024 to 2025 in physical capital per worker from 2024 to 2025 is associated with 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 weaving industry? Check all that apply. Imposing restrictions on foreign ownership of domestic capital Imposing a tax on looms Subsidizing research and development into new weaving technologies Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts

Explanation / Answer

Based on your calculations, a decrease in Physical capital per worker from 2024 to 2025 is associated with a decrease in labor productivity from 2024 to 2025.

Explanation : The changes in the small economy's physical capital per worker and labor productivity from one year to the next illustrate the general principle that a higher level of capital per worker leads to higher labor productivity. When each worker has more equipment and tools to work with, each worker will generate more output per hour of labor. On the other hand, if each worker has a smaller amount of equipment and tools to work with, each worker will generate a smaller amount of output per hour of labor.

The following policies would lead to greater productivity:

-encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts.
-subsidizing research and development into new weaving technologies.

4 primary factors of productivity:
-human capital per worker, natural resources per worker, physical capital per worker, technological knowledge

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.