Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.
-Refer to the above information.All else being equal,if the price of each input increased from $4 to $6,productivity would:
A) fall from 2 to 3.
B) fall from .50 to .33.
C) rise from 1 to 2.
D) remain unchanged.

Question

Quizplus · Accepted Answer

Productivity is calculated as output per unit of input. In this case, productivity is 20 units of output divided by 10 units of input, which equals 2. A change in the price of inputs does not affect the productivity calculation, as productivity is independent of input prices.

Suppose That Real Domestic Output in an Economy Is 20