Over the past year,output grew 3%,capital grew 4%,and labour grew 3%.If the elasticities of output with respect to capital and labour are 0.3 and 0.7 respectively,how much did productivity grow?

Question

Quizplus · Accepted Answer

Productivity growth can be calculated using the formula: Productivity Growth = Output Growth - (Elasticity of Capital * Capital Growth) - (Elasticity of Labour * Labour Growth). Substituting the given values: Productivity Growth = 3% - (0.3 * 4%) - (0.7 * 3%) = 3% - 1.2% - 2.1% = -0.3%.

Over the Past Year,output Grew 3%,capital Grew 4%,and Labour Grew