The productivity (in terms of output per worker) of the economies of Hermes and Gobbledigook can be computed as follows:
1. Hermes
Physical Capital Labor Force Output Productivity
Year (Tools per worker) (Workers) (Gaggles (Gaggles per
of gop) worker)
2014 11 30 3,000 100 (3,000/30)
2034 15 30 3,600 120 (3,600/30)
2. Gobbledigook
Physical Capital Labor Force Output Productivity
Year (Tools per worker) (Workers) (Gaggles (Gaggles per
of gop) worker)
2014 8 30 2,400 80 (2,400/30)
2034 12 30 3,600 120 (3,600/30)
3. The 4-unit change in capital per worker causes the productivity in Hermes to rise by a <u>smaller</u> amount (20%) than the productivity in Gobbledigook (50%). This illustrates the concept of diminishing returns, which makes it easier for countries with low output to catch up to those with higher output.
<h3>What is the law of diminishing marginal returns?</h3>
The law of diminishing returns states that a developed nation's growth rates tend to slow as the economy matures, enabling developing nations to catch up with the former's growth.
Learn more about productivity and diminishing marginal returns here: brainly.com/question/11148440