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mariasmakatof mariasmakatof
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A month ago
Scenario: Two economies, A and B, have identical aggregate production functions with diminishing returns. In both economies, capital and labor are equally important for production. Economy A has twice as many efficiency units of labor as economy B. Economy B has twice as much physical capital stock as economy A.


Refer to the scenario above. Which of the following statements is TRUE?

▸ Productivity must be greater in economy A.

▸ The relationship between GDP and physical capital stock cannot be the same in economies A and B.

▸ The relationship between GDP and total efficiency units of labor must be the same in economies A and B.

▸ All of the above.
Textbook 
Macroeconomics

Macroeconomics


Edition: 3rd
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inhibitor128inhibitor128
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The relationship between GDP and total efficiency units of labor must be the same in economies A and B.
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mariasmakatof Author
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A month ago
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