The formula Y/(KᵃN¹⁻ᵃ)provides a calculation of
A)x-efficiency.
B)dynamic efficiency.
C)economywide monopoly power.
D)the Solow residual.

Question

Quizplus · Accepted Answer

The formula Y/(KᵃN¹⁻ᵃ) is used in economics to calculate the Solow residual, which is a measure of total factor productivity (TFP). TFP captures how efficiently inputs (capital and labor) are transformed into outputs (goods and services). The Solow residual measures the portion of economic growth that cannot be explained by changes in inputs, such as capital and labor, and is often interpreted as technological progress.

The Formula Y/(KᵃN¹⁻ᵃ)provides a Calculation of