Refer to the following table when answering the following questions.
Table 4.1: Production Model's Prediction for Per Capita GDP (US = 1) (Source: Penn World Tables 9.0)
-One explanation for the difference between the predicted output per person and the observed per capita GDP in Table 4.1 is differences in:
A) the labor supply.
B) the state of technology.
C) per capita capital.
D) capital's share of GDP.
E) labor's share of GDP.

Question

Refer to the following table when answering the following questions.
Table 4.1: Production Model's Prediction for Per Capita GDP (US = 1)  (Source: Penn World Tables 9.0)
-One explanation for the difference between the predicted output per person and the observed per capita GDP in Table 4.1 is differences in:
A) the labor supply. 
B) the state of technology. 
C) per capita capital. 
D) capital's share of GDP. 
E) labor's share of GDP.

Quizplus · Accepted Answer

The predicted output per person in Table 4.1 is based on the Production Model's assumption of an economy operating at its technological frontier. Therefore, the difference between the predicted output per person and the observed per capita GDP is likely due to differences in the state of technology.

Refer to the Following Table When Answering the Following Questions