How do increases in technology affect the aggregate production function?

A. As technology increases, diminishing marginal product sets in such that each unit of technology produces less output.

B. With better technology, the aggregate production function shifts down because fewer workers are needed.

C. Even with technology increases, the aggregate production function will remain constant unless the technology increases are matched by increases in the physical capital stock.

D. With increases in technology, the aggregate production function shifts up, indicating more output is produced from the same amount of inputs.

Question

Business

Rhys Todd

7 December, 09:01

How do increases in technology affect the aggregate production function?

A. As technology increases, diminishing marginal product sets in such that each unit of technology produces less output.

B. With better technology, the aggregate production function shifts down because fewer workers are needed.

C. Even with technology increases, the aggregate production function will remain constant unless the technology increases are matched by increases in the physical capital stock.

D. With increases in technology, the aggregate production function shifts up, indicating more output is produced from the same amount of inputs.

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Answers (1)

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Wayne Ayers · Answer 1

The answer is: D) With increases in technology, the aggregate production function shifts up, indicating more output is produced from the same amount of inputs.

Explanation:

Technological improvements in new manufacturing machines and tools enable the production of more manufactured goods using the input. As technology increases, the production function shifts upward, is steeper, and the marginal product of capital increases.