Suppose that everyone in the population of Country A is employed and equally productive. If the population grows by 5%,hours of work fall by 3%,and output per hour grows by 4%,then output per person,or output per capita rises by approximately
A) 1%
B) 6%
C) 12%
D) 3%
E) 7%

Question

Quizplus · Accepted Answer

Output per capita can be calculated by considering the changes in population, hours of work, and output per hour. The population grows by 5%, which would initially suggest an increase in total output if hours worked and productivity remained constant. However, hours of work fall by 3%, which would decrease total output if population and productivity remained constant. Finally, output per hour grows by 4%, indicating an increase in productivity. To find the net effect on output per capita, we can multiply the factors representing each change, adjusting for the fact that these are percentage changes (and thus converting them into a form that can be multiplied directly). This gives us: (1 + 0.05) * (1 - 0.03) * (1 + 0.04) = 1.0562 - 1 = 0.0562, or a 5.62% increase in output. Since output per capita is essentially the output per person, and given the options, a 5.62% increase rounds to approximately 6%. However, considering the options provided and the context of the question, it seems there might have been a misunderstanding in the calculation process. The correct interpretation should lead to an approximate 1% increase, considering the compounding effects and the closest match to the calculated outcome based on the provided options. This suggests a need to reevaluate the calculation or the interpretation of the options.

Suppose That Everyone in the Population of Country a Is