The economic growth model explains growth in real GDP per capita in the long run. Because of the importance of labor productivity in explaining economic growth, the economic growth model focuses on the causes of increases in long-run labor productivity. What are the key factors that determine labor productivity? (Mark all that apply.) A. Trade B. Efficiency wages C. Quantity of capital per hour worked D. Technological change

In modern economies, factors of production capital and labor are associated in the production process. Each combination of capital and labor generates a quantity of output, so firms' problem is finding the right combination of these factors that maximizes output at the lowest possible cost.

The role of technology in this context is to modify the productivity of the factors of production. Technologies can be introduced to increase both capital and labor productivity. For example, more modern machines and technical knowledge respectively. Thus, it is correct to say that technological changes can change the hourly productivity of production factors.

Moreover, macroeconomic theory uses the concept of efficiency wage, which consists of setting wages above the wage higher than the average market wage to induce positive stimuli in workers. For example, with the efficiency wage, the worker tends to be more productive, positively affecting the firm's revenue, and reducing turnover between jobs, minimizing transaction costs such as hiring costs.