Question
A popular measure of productivity is the ratio of output ( say , real GDP ) to employment ( say , worker hours )
- A popular measure of productivity is the ratio of output say real GDP to employment say worker hours In the graph of the production function that follows, this concept of productivity at the employment level I is given by the ratio YLProductivity at this point equals the slope of the dashed line that is drawn from the origin to intersect the production function at the employment level
a For the production function shown and for the employment level I,
b. show graphically that productivity, yl always exceeds the marginal product of labor, MPL
c Assume now that the form of the production function does not change. But suppose that people shift their tastes and become more willing to work. That is at the initial fevels of work and consumption, each person requires a smaller addition in consumption to give up a umit of ieisure. What happens here to the choices of wotk effort, l and output, y What happens to productivity, yl
y RO)
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