Question

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. with increases in​ technology, the aggregate production function shifts​ up, indicating more output is produced from the same amount of inputs.
d. even with technology​ increases, the aggregate production function will remain constant unless the technology increases are matched by increases in the physical capital stock?

Answer 1

Answer : C: with increases in​ technology, the aggregate production function shifts​ up, indicating more output is produced from the same amount of inputs.

Reason: With increase in technology, the same process which requires manpower can be automated and this automation increases the production efficiency which shifts up the production function from the same number of inputs