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 the technology coefficient __________________.
A) shifts the production function upward; also shifts the production function upward
B) moves us up along a given production function; shifts the production function upward
C) shifts the production function downward; shifts the production function upward
D) shifts the production function upward; moves us up along a given production function

Question

Quizplus · Accepted Answer

When labor increases, it moves us up along a given production function as more output can be produced with more labor. When the technology coefficient increases, it shifts the production function upward as output can be produced with less labor or more efficiently. Therefore, the correct answer is B - moves us up along a given production function; shifts the production function upward.

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