High School

Once technological progress is introduced, how does the change in capital stock per worker behave?

A. The change in capital stock per worker increases.
B. The change in capital stock per worker decreases.
C. The change in capital stock per worker remains constant.
D. The change in capital stock per worker becomes negative.

Answer :

Final answer:

The introduction of a technological process generally results in an increase in capital stock per worker, which boosts worker productivity, drives demand for labor, and raises real wages. Thus, the correct option is a. Change in capital stock per worker increases.

Explanation:

When a technological process is introduced, the change in capital stock per worker typically increases. This is because technological advancements tend to improve the productivity of the workers, which in turn can lead to the need for more or upgraded capital to support the enhanced production processes. As the capital stock increases relative to the number of workers, firms may require more machinery, equipment, or technology per worker. This increase in the capital stock per worker can contribute to economic growth by improving worker productivity, increasing the demand for labor, and raising real wages.

However, this increase in capital stock per worker doesn't happen in isolation; it's a dynamic process where the overall effects depend on various factors including the pace of technological change, the growth rate of the workforce, and the relationship between capital stock and output. Analysis of historical trends suggests that improvements in technology and increases in the stock of capital have not reduced overall employment but have increased the demand for labor, increased worker productivity, and raised real wages.