In the production function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , $\bar { A }$
Represents:
A) an unknown
B) the amount of capital in an economy
C) the amount of labor in an economy
D) a productivity parameter
E) an error term

Question

Quizplus · Accepted Answer

$\bar{A}$ represents a productivity parameter, often referred to as total factor productivity, which captures the efficiency with which capital and labor are used in production.

In the Production Function Y=F(K,L)=AˉKˉ1/3L2/3Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }Y=F(K,L)=AˉKˉ1/3L2/3

In the Production Function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$