Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 20, Problem 11SCQ
Would you expect capital deepening to result in diminished1‘etmns? Why or why not? Would you expect improvements in technology to result in diminished returns? Why or why not?
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Why Capital does not Flow from Rich to Emerging Countries?
We assume that the production function in country i is
1
1
2
Yi = A ² k²,
(1)
where y, and ki are output and capital per capita, respectively, in country i, and
A is a measure of technology in country i.
(a) Calculate the marginal product of capital (MPK) denoted by Ri in country i.
(b) Express the MPK in terms of output per capita, yi, i.e., eliminate ki from Ri
by using the production function (1).
(c) We consider two countries, indexed by i 1 and i 2, whose production
function is described by (1). Both are assumed to have the same level of
productivity, i.e., A₁ A2. We assume y2 50y₁. Calculate the ratio R₁/R₂.
(d) We keep assuming that y2 50y1, but now we assume that A2
educational attainment is higher in country 2. Calculate the ratio R₁/R₂ under
10A₁ because
these assumptions.
FX
=
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(e) We keep assuming y2 50y₁ but now we consider that technology in country 1
is a function of technology of the more advanced country 2,…
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Chapter 20 Solutions
Principles of Economics 2e
Ch. 20 - Explain what the Industrial Revolution was and...Ch. 20 - Explain the difference between property rights and...Ch. 20 - Are there other ways in which we can measure...Ch. 20 - Assume there are two countries: South Korea and...Ch. 20 - What do the growth accounting studies conclude are...Ch. 20 - What policies can the government of a free-market...Ch. 20 - List the areas where government policy can help...Ch. 20 - Use an example to explain why, after periods of...Ch. 20 - Would the following events usually lead to capital...Ch. 20 - What are the advantages of backwardness for...
Ch. 20 - Would you expect capital deepening to result in...Ch. 20 - Why dues productivity growth in high-income...Ch. 20 - How did the Industrial Revolution increase the...Ch. 20 - How much should a nation be concerned if its rate...Ch. 20 - How is GDP per capita calculated differently from...Ch. 20 - How do gains in labor productivity lead to gains...Ch. 20 - What is an aggregate production function?Ch. 20 - What is capital deepening?Ch. 20 - What do economists mean when they refer to...Ch. 20 - For a high-income economy like the United States,...Ch. 20 - List some arguments for and against the likelihood...Ch. 20 - Over the past 50 years, many countries have...Ch. 20 - Labor Productivity and Economic Growth outlined...Ch. 20 - Change in labor productivity is one of the most...Ch. 20 - Refer back to the Work It Out about Comparing the...Ch. 20 - Education seems to be important for human capital...Ch. 20 - Describe some of the political and social...Ch. 20 - Why is investing in girls education beneficial for...Ch. 20 - How is the concept of technology, as defined with...Ch. 20 - What sorts of policies can governments implement...Ch. 20 - As technological change makes us more sedentary...Ch. 20 - An economy starts off with a GDP per capita of...Ch. 20 - An economy starts off with a GDP per capital of...Ch. 20 - Say that the average worker in Canada has a...Ch. 20 - Say that the average worker in the U.S. economy is...
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