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Chapter 20: Q 17. (page 496)

What is an aggregate production function?

Short Answer

Expert verified

The aggregate production function is related to the total output and total amount of labor employed in the economy.

Step by step solution

01

Step 1. The formula of the aggregate production function.

We can use the Cobb-Douglas function to calculate total aggregate production. According to tot this formula the production is equal to real output per input unit times labor input times capital input.

02

Step 2. Explanation

The aggregate production function is defined as the highest output that can be produced by given quantities of the factors of production such as capital-labor and technology.

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Most popular questions from this chapter

How is the concept of technology, as defined with the aggregate production function, different from our everyday use of the word?

Refer back to the Work It Out about Comparing the Economies of Two Countries and examine the data for the two countries you chose. How are they similar? How are they different?

List some arguments for and against the likelihood

of convergence.

Would you expect capital deepening to result in diminishing returns? Why or why not? Would you expect improvements in technology to result in diminishing returns? Why or why not?

Would the following events usually lead to capital deepening? Why or why not?

  1. A weak economy in which businesses become reluctant to make long-term investments in physical capital.
  2. A rise in international trade.
  3. A trend in which many more adults participate in continuing education courses through their employers and at colleges and universities.
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