Economic Growth In The Context Of The Production Possibilities Frontier Case Study

Economic growth in the context of the production possibilities frontier is defined as a representation of a point at which an economy is most efficiently producing the nation’s goods and services and therefore allocating all its resource in the best way possible. If the economy is not producing at the amount of estimated quantities that are indicated by the production possibility frontier that means the resource are being managed inefficiently and the production of the economy will start to slow down. With the production possibility frontier it give an economic limits and goals on production so that the economy can achieve optimal efficiency that consists of a combination of goods and services being produced and provide by in the best available …show more content…
But the total factor productivity estimates has some flaws as it is an estimate and not directly observed to obtain to calculated values but only using the measured inputs and how they contribute to the to the output, and the inputs do not cover all fields also the given out can be increased by the experience and skill of new workers. The TFP does allow the nation to get a good enough estimate to stay optimistic and something to look forward as economic growth is being predicted though the advancements of technology.Economic growth in the context of the production possibilities frontier is defined as a representation of a point at which an economy is most efficiently producing the nation’s goods and services and therefore allocating all its resource in the best way possible. If the economy is not producing at the amount of estimated quantities that are indicated by the production possibility frontier that means the resource are being managed inefficiently and the production of the economy will start to slow …show more content…
This will also improve efficiency as the new technological advancements can speed up production or allow the nation to utilize the new technology in a way that is the most beneficial to the country’s economy. One of the most commonly used measurements of productivity is labor productivity this is real representation of the output per hour worked over the long run and improvements in labor productivity promotes economic growth, increased wages, and income. While labor productivity can grow due to multiple reasons being there is more available capital per employee, there has been an increase in labor skills either by having a workforce that is experienced in the field or has been educated and trained properly for the job and at time some may all three the education, training, and work experience. Also as mentioned before as the nation begins to see more technological advancements this helps improve the quality and productivity for a given level of capital and labor skills, this can lead to new inventions, furthermore technological progression, and increase process improvements. The growth rate of labor productivity equals to the growth rate of the output minus the growth rate of labor input, this formulates to the growth rate of output per worker