Suppose an economy uses only two inputs in production: capital and labour. The following table describes a production function, where y stands for output per worker and k is capital per worker. Suppose there are two countries, A and B. The economies of the two countries can be described by this production function. If Country A has initially a capital–labour ratio k = 0.167 and Country B has k = 0.412, show that an equal increase in capital produces more extra output in country A than in Country B. Explain with words (computations) + graph y k 0.000 0.000 0.173 0.030 0.302 0.091 0.408 0.167 0.480 0.231 0.535 0.286 0.577 0.333 0.612 0.375 0.642 0.412 0.667 0.444 0.688 0.474 0.707 0.500 0.724 0.524 0.739 0.545
Suppose an economy uses only two inputs in production: capital and labour. The following table describes a production function, where y stands for output per worker and k is capital per worker. Suppose there are two countries, A and B. The economies of the two countries can be described by this production function. If Country A has initially a capital–labour ratio k = 0.167 and Country B has k = 0.412, show that an equal increase in capital produces more extra output in country A than in Country B. Explain with words (computations) + graph y k 0.000 0.000 0.173 0.030 0.302 0.091 0.408 0.167 0.480 0.231 0.535 0.286 0.577 0.333 0.612 0.375 0.642 0.412 0.667 0.444 0.688 0.474 0.707 0.500 0.724 0.524 0.739 0.545
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose an economy uses only two inputs in production: capital and labour. The following table describes a production function, where y stands for output per worker and k is capital per worker.
Suppose there are two countries, A and B. The economies of the two countries can be described by this production function. If Country A has initially a capital–labour ratio k = 0.167 and Country B has k = 0.412, show that an equal increase in capital produces more extra output in country A than in Country B.
Explain with words (computations) + graph
|
y |
k |
|
0.000 |
0.000 |
|
0.173 |
0.030 |
|
0.302 |
0.091 |
|
0.408 |
0.167 |
|
0.480 |
0.231 |
|
0.535 |
0.286 |
|
0.577 |
0.333 |
|
0.612 |
0.375 |
|
0.642 |
0.412 |
|
0.667 |
0.444 |
|
0.688 |
0.474 |
|
0.707 |
0.500 |
|
0.724 |
0.524 |
|
0.739 |
0.545 |
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