High School

In the production model, we measure per capita income as:

A. GDP per unit of capital (Y/K)
B. GDP (Y)
C. Capital per worker (K/L)
D. GDP per worker (Y/L)

Answer :

In the production model, per capita income is measured by different ratios involving GDP (Gross Domestic Product) and various factors of production.

The measurement of per capita income in the production model involves analyzing the relationship between GDP and the factors of production. GDP per unit of capital (Y/K) represents the output produced per unit of capital investment, indicating the productivity of capital in generating income.

GDP per worker (Y/L) measures the output per worker, reflecting the efficiency of labor in contributing to the overall income of an economy. Capital per worker (K/L) assesses the level of capital investment per worker, which can indicate the potential for productivity growth and increased income generation.

By analyzing these ratios, policymakers, economists, and researchers can gain insights into the productivity and income levels of an economy. These measures help in understanding the efficiency of capital and labor utilization, identifying areas for improvement, and assessing the overall economic performance in terms of per capita income.

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