Given a production function Y = AF(L, K, H, N), where Y is the quantity of output, L is the quantity of labour, H is the quantity of human capital and N is the quantity of natural resources, what does A represent?
A)Productivity growth
B)The physical capital per worker
C)The level of available production technology
D)Technological growth

Question

Quizplus · Accepted Answer

A represents the level of available production technology, also known as total factor productivity (TFP) which includes technology, knowledge, and efficiency in production processes. It shows the level of output that can be produced from given inputs of labour, capital, human capital, and natural resources. Productivity growth and technological growth are related concepts, but they refer to changes in A over time rather than the level of A itself. The physical capital per worker is represented by K/L.

Given a Production Function Y = AF(L, K, H, N)