Question

Consider the economies of Sporon and Tralfamadore, both of which produce glops of gloop using only tools and workers. Suppose that, during the course of 40 years, the level of physical capital per worker rises by 5 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 2020 and 2060.Year SporonPhysical Capital Labor Force Output Productivity(Tools per worker) (Workers) (Glops of gloop) (Glops per worker)2020 11 30 1,800 _______2060 16 30 2,160 _______Year TralfamadorePhysical Capital Labor Force Output Productivity(Tools per worker) (Workers) (Glops of gloop) (Glops per worker)2020 8 30 900 _______2060 13 30 1,620 _______Initially, the number of tools per worker was higher in Sporon than in Tralfamadore. From 2020 to 2060, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Sporon to rise by a ( larger,smaller) amount than productivity in Tralfamadore. This illustrates the concept of (increasing returns, constant returns, inward- oriented growth, the brain dain, diminishing returns), which makes it (more difficult, easier) for countries with low output to catch up to those with higher output.

Answer 1

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