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It is found that a one-unit increase in capital leads to a higher increase in the production of good ...

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It is found that a one-unit increase in capital leads to a higher increase in the production of good ...

It is found that a one-unit increase in capital leads to a higher increase in the production of good X in Farm Country than in Industry Country. Why might this be the case if both countries have the same amount of total efficiency units of labor?

▸ Increase in output is smaller if less capital is used in production.

▸ Increase in output is greater if more capital is used in production.

▸ Physical capital stock is greater in Farm Country.

▸ Physical capital stock is smaller in Farm Country.

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Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

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