When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________,and a rise in capital __________________.
A) shifts the production function upward; also shifts the production function upward
B) shifts the production function downward; shifts the production function upward
C) moves us up along a given production function; shifts the production function upward
D) shifts the production function upward; moves us up along a given production function

Question

Quizplus · Accepted Answer

A rise in labor moves us up along a given production function, meaning it increases output but does not shift the entire production function upward. A rise in capital shifts the production function upward, as it increases the potential output for any given level of labor.

When a Production Function Is Graphed with Real GDP on the Vertical