Productivity and growth policies onsider a small sland count

Productivity and growth policies onsider a small sland country whose only industry is fishing. The following table shows information about the small economy in two different years Complete the table by calculating physical capital per worker as well as labor productivity Hint: Recall the quantity of goods per hour of labor. that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as Physical Capital Labor Force Physical Capital per Worker Labor Hours Labor Productivity (Fish per hour of labor) Output CFish) 7,200 16,800 Year (Fishing poles) (Workers)(Fishing poles (Hours) 900 1,400 2016 40 20 2017 120 40 Based on your calculations, an increase in physical capital per worker from 2016 to 2017 is associated with an increase in labor productivity from 2016 to 2017. Suppose you\'re in charge of establishing economic policy for this small island country Which of the following policies would lead to greater productivity in the fishing industry? Check all that apply Encouraging saving by allowing workers to set aside a portion of their earnings in tax-free retirement accounts ? sharply increasing the interest rate on student loans to people pursuing advanced degrees in fishing Offering free public education to every worker in the country Imposing restrictions on foreign ownership of domestic capital

Solution

2016 - Fish per hour of labour = Output/labour hours = 7200/900 = 8 fish/hour of labour

2017 - Fish per hour of labour = 16,800/1400 = 12 fish/hour of labour

2. Offering free public education to every worker in the country. This is because providing free education would help create newer ideas and newer technology which would ultimately improve output.