If the slope of the per-worker production function is 1/4 in a given range, how will a $10,000 increase in capital per hour worked affect real GDP per hour worked in the same given range?
A)Real GDP per hour worked will increase by $2,500.
B)Real GDP per hour worked will increase by $40,000.
C)Real GDP per hour worked will increase by $10,000.
D)Real GDP per hour worked will decrease by $40.000.
E)Real GDP per hour worked will decrease by $10,000.

Question

Quizplus · Accepted Answer

The slope of the per-worker production function (1/4) represents the marginal product of capital. Therefore, a $10,000 increase in capital per hour worked will increase real GDP per hour worked by 1/4 of $10,000, which is $2,500.

If the Slope of the Per-Worker Production Function Is 1/4