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Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, ...

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Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, ...

Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, population (800,000), education of workforce, and value of natural resources owned.

Refer to the scenario above. Holding physical capital stock constant, Sweetland's aggregate production function lies above Sourland's production function. This implies that costs of producing the same amount of output ________.

▸ are the same in Sourland and Sweetland

▸ are greater in Sourland

▸ are greater in Sweetland

▸ are increasing faster in Sweetland

Textbook

Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

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