Consider the economies of Hermes and Gribinez,both of which produced gaggles of
ID: 1248951 • Letter: C
Question
Consider the economies of Hermes and Gribinez,both of which produced gaggles of gop using only tools and workers.Suppose that,over the course of 50 years,the level of physical capital per worker rises by one tool per worker in each economy,but the size of the labor force remains the same.
Hermes numbers below are pysical cap per worker,labor force and output
year 2020 2 (Pysical capital per worker ) 40( Labor force(workers) 4000(Output)
year 2070 3 40 5200
Gribinez
year 2020 1 40 2000
2 40 4000
Productivity 2020 2070
Hermes ? ?
Gribinez ? ?
Initially the number of tools per worker was higher in Hermes than in Gribinez.From 2020 to 2070,capital per worker rises by one unit in each country.The one unit change in capital per worker causes productivity in Hermes to rise by a LARGER OR SMALLER? amount than productivity in Gribinez.This illustrates the concept of which one of the below?
-diminishing returns
-the brain drain
-increasing returns
-inward oriented growth
-constant returns
Explanation / Answer
i got it by myself. output/labor hours=productivity diminishing returns it's smaller in this case