7. There are large global inequalities in the amount of capital different countries have. Part of that is a result of choices by multinational businesses in where to build their factories. Should an American business like Ford build its next factory in the United States or in another country like Ghana? Many considerations go into this decision, but one of the most important ones is how much extra output the business would generate if it located an additional unit in the United States as opposed to India or another country. For these question assume that all countries have the same aggregate production function: Y = A x VK x Vī but that countries vary in their capital stocks, labor forces, and TFP. X. Many people argue that all countries have access to the same technology. They argue that for the most part most ideas are on the internet which can be accessed from anywhere. So, for now, assume A = 1 in all countries. country K K/L ratio U.S. 691 158.2 4.37 Ghana 4.21 13.2 0.319 Calculate the MPK for the two countries. Based on this model where would you get the best return on your investment? a. U.S., the capital-rich country b. Ghana, the capital-poor country C. same in both

7. There are large global inequalities in the amount of capital different countries have. Part of that is a result of choices by multinational businesses in where to build their factories. Should an American business like Ford build its next factory in the United States or in another country like Ghana? Many considerations go into this decision, but one of the most important ones is how much extra output the business would generate if it located an additional unit in the United States as opposed to India or another country. For these question assume that all countries have the same aggregate production function: Y = A x VK x Vī but that countries vary in their capital stocks, labor forces, and TFP. X. Many people argue that all countries have access to the same technology. They argue that for the most part most ideas are on the internet which can be accessed from anywhere. So, for now, assume A = 1 in all countries. country K K/L ratio U.S. 691 158.2 4.37 Ghana 4.21 13.2 0.319 Calculate the MPK for the two countries. Based on this model where would you get the best return on your investment? a. U.S., the capital-rich country b. Ghana, the capital-poor country C. same in both

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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