In the aggregate production function scenario, which factor is held constant when measuring the impact of capital per worker on output per worker?

• A. Technology
• B. Labor
• C. Human capital and technology
• D. Prices

Answer: (C)

In an aggregate production function, output per worker depends on capital per worker and other factors that affect productivity, like technology and human capital. When we want to see how changing capital per worker alone influences output per worker, we hold those other productivity-shifting factors constant. Keeping technology level and human capital per worker fixed lets the relationship between capital per worker and output per worker show up clearly, without any simultaneous changes from A or H. Prices aren’t part of the production process itself, so they aren’t the factor we hold constant to study this connection.