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) per capita capital.
B) the labor supply.
C) factor productivity.
D) labor's share of GDP.
E) None of these answers is correct.

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) per capita capital. 
B) the labor supply. 
C) factor productivity. 
D) labor's share of GDP. 
E) None of these answers is correct.

Quizplus · Accepted Answer

The predicted output per person is based on the production model's prediction for factor productivity, which is essentially how efficiently labor and capital are being used in production. Therefore, the main explanation for the difference between the predicted and observed per capita GDP is differences in factor productivity.

Refer to the Following Table When Answering the Following Questions