Output per person is higher when:

Question

BlackTom AI · Accepted Answer

Question restatement: 'Output per person is higher when: Select one: a) a country is more efficient in adopting a technology. b) a country has a higher capital-to-population ratio. c) a country has stronger property rights and contract enforcement. d) All of these choices are correct.'

Option a: This statement focuses on efficiency in adopting technology. If a country can adopt and diffuse technology more efficiently, it can produce more output per person by leveraging productivity gains from new methods, processes, or devices. However, efficiency in adoption alone may not guarantee higher output unless other conditions (like capital, institutions) support implementation. So this answer highlights one important channel, but it’s not by itself sufficient.

Option b: A higher capital-to-population ratio means more physical and accumulated resources per person. More capital per worker can boost labor productivity, enabling higher output per person, assuming diminishing returns don’t offset the gains and that other inputs (skills, institutions) are adequate. This is a direct mechanism for increasing per-person output.

Option c: Stronger property rights and contract enforcement reduce risks and transaction costs, encourage investment, and improve reallocations to higher-value activities. Well-defined rights and credible enforcement lower the cost of doing business and spur productive activity, which raises output per person over time. This option captures the role of institutions in economic performance.

Option d: 'All of these choices are correct.' This option asserts that each of the above channels contributes to higher output per person, and together they provide a comprehensive explanation. To reach higher per-person output, a country typically benefits from technological adoption efficiency, adequate capital per person, and solid institutions that protect investments and contracts. A complete answer recognizes that multiple, interacting factors drive productivity and living standards, not just a single mechanism.

Why the other options are not sufficient on their own: Option a describes a mechanism (technology adoption efficiency) that matters but may be limited by capital constraints or institutions; Option b describes a crucial resource base but without productivity or incentive effects, higher capital alone may not raise per-person output; Option c describes institutional quality, which is critical but typically operates alongside technology and capital to translate into higher output. Therefore, each of a, b, and c identifies a genuine pathway, but none by itself captures the full story. The most comprehensive explanation is that all these factors together influence output per person, via multiple channels that reinforce one another.

Overall, the reasoning shows that enhancing output per person benefits from improvements in technology adoption, capital deepening, and institutional quality, and their combination matters for the strongest impact.

ECON2102-Macroeconomics 2 - T3/2025

Output per person is higher when:

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