In Econland,population increased from 1 million to 1.1 million,the number of employed workers increased from 500,000 to 600,000,but average labour productivity decreased from $20,000 per worker per year to $19,000 per worker per year.Total output in Econland _________ and the average standard of living _________.

Question

Quizplus · Accepted Answer

Total output increased because the number of employed workers increased and even though productivity per worker decreased, the overall output (600,000 workers * $19,000) is higher than before (500,000 workers * $20,000). The average standard of living increased because total output increased more than the population, leading to a higher output per capita.

In Econland,population Increased from 1 Million to 1