Scenario: Tree Country has a population of 18,000 people, of whom two-thirds are part of the workforce. The country's only asset is wood, where K = 18,000. The country only produces wooden furniture. In the figure below, Y stands for GDP, and H equals efficiency units of labor.

-Refer to the scenario above.If the country's population increases,new technology in the production of furniture will ________.
A) cause the country's GDP to grow at a higher rate
B) decrease GDP
C) cause the country's GDP per capita to grow at a higher rate
D) counteract decreases in GDP per capita

Question

Scenario: Tree Country has a population of 18,000 people, of whom two-thirds are part of the workforce. The country's only asset is wood, where K = 18,000. The country only produces wooden furniture. In the figure below, Y stands for GDP, and H equals efficiency units of labor.
 
-Refer to the scenario above.If the country's population increases,new technology in the production of furniture will ________.
A) cause the country's GDP to grow at a higher rate 
B) decrease GDP 
C) cause the country's GDP per capita to grow at a higher rate 
D) counteract decreases in GDP per capita

Quizplus · Accepted Answer

If the country's population increases and new technology is introduced, it can increase the productivity of labor, leading to an increase in GDP. Therefore, option A is the best choice. The increase in population may lead to a decrease in GDP per capita, but the new technology can counteract this effect. However, this information is not given in the scenario, so option C and D cannot be the best choice. Option B is incorrect because the introduction of new technology would not necessarily decrease GDP.

Scenario: Tree Country Has a Population of 18,000 People, of Whom