Consider a small Island country whose only Industry Is fishing. The following ta

Question

Consider a small Island country whose only Industry Is fishing. The following table shows Information about the small economy In two different years. Recall that productivity Is the quantity of goods produced from each unit of labor. For this problem, measure productivity as the quantity of goods per hour of labor. Use the figures from the table above to fill In the table below: In the table above, In physical capital per worker from 2030 to 2031 Is associated with In labor productivity from 2030 to 2031. Suppose you're In charge of establishing economic policy for the small Island country. Which of the following policies would lead to greater productivity In the fishing Industry? Check all that apply. Imposing a tax on fishing poles Imposing restrictions on foreign ownership of domestic capital Subsidizing research and development Into new fishing technologies Investing In combating malnutrition and promoting nutrition In the labor force

Explanation / Answer

physical capital per worker = 4(2030) = 5(2031) labor productivity = 2.5(2030) = 3(2031) increase in 1 unit in physical capital is associated with 0.5 unit increase in productivity option 3and 4 subsidizing research and development into new fishing technologies investing in combating malnutrition and promoting nutrition in labor force

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