Scenario: Country X has 1,000 workers. The country's aggregate production function is YX = 1.5 KX²/³ HX¹/³, where KX = 1,000,000 and HX = 2,500,000.
-Refer to the scenario above.Assume the country's human capital per worker increases and total efficiency units of labor now equal 2,000,000.How could this be the case?
A) Total output must have increased.
B) The labor force must have gotten smaller.
C) The labor force must have gotten bigger.
D) Average length of education must have decreased.

Question

Quizplus · Accepted Answer

The total efficiency units of labor increased while the total human capital increased, suggesting that the labor force must have gotten smaller, as the human capital per worker increased.

Scenario: Country X Has 1,000 Workers