A production function says output per worker equals A × f(L/L, K/L, H/L, N/L) and tells us all of these EXCEPT _____ will lead to a better standard of living.

Question

Quizplus · Accepted Answer

The production function indicates that output per worker (a proxy for standard of living) increases with increases in capital (K/L), human capital (H/L), and natural resources (N/L). More people (L/L) does not inherently improve output per worker or standard of living; it simply increases the denominator without necessarily increasing the numerator, which could dilute the output per worker unless accompanied by proportional increases in the other factors.

A Production Function Says Output Per Worker Equals a ×