Consider the economies of Sporon and Gribinez, both of which produce gobs of goo
ID: 2496289 • Letter: C
Question
Consider the economies of Sporon and Gribinez, both of which produce gobs of goo using only tools and workers. Suppose that, during the course of 30 years, the level of physical capital per worker rises by 3 tools per worker in each economy, but the size of each labor force remains the same. Complete the following tables by entering productivity (in terms of output per worker) for each economy in 2019 and 2049. Initially, the number of tools per worker was lower in Sporon than in Gribinez. From 2019 to 2049, capital per worker rises by 3 units in each country. The 3-unit change in capital per worker causes productivity in Sporon to rise by a____amount than productivity in Gribinez. This illustrates the concept of___which makes it____for countries with low output to catch up to those with higher output.Explanation / Answer
Sporon
Productivity per worker
2019 3000/50= 60
2049 3600/50= 72
Gribinez
Productivity per worker
2019 4000/50 =80
2049 4300/50 = 86
The 3 unit chnage in capital per worker causes productivity in sporon to rise by greater (20% as compared to 7.5% in gribinez) amount than in gribinez. This illustrates the concept of convergence/catch up effect which makes it possible for countries with low output to catch up to those with higher output.