Scenario: Assume the following aggregate production functions for two countries, A and B, respectively.
YA=A KA¹/² ᴴA¹/²
ʸB=A KB²/³ ᴴB¹/³
-Refer to the scenario above.Assume Country A and Country B have equal technology and human capital stock,but Country A's capital stock is 10 percent bigger than Country B's capital stock.What can you say about output in the two countries?
A) Output is exactly equal in Country A and Country B.
B) Output is bigger in Country A.
C) Output is bigger in Country B.
D) It is not possible to come to any conclusions with the given information.

Question

Quizplus · Accepted Answer

The Answer of Scenario: Assume the following aggregate production functions for two countries, A and B, respectively.
YA=A KA¹/² ᴴA¹/²
ʸB=A KB²/³ ᴴB¹/³
-Refer to the scenario above.Assume Country A and Country B have equal technology and human capital stock,but Country A's capital stock is 10 percent bigger than Country B's capital stock.What can you say about output in the two countries?
A) Output is exactly equal in Country A and Country B.
B) Output is bigger in Country A.
C) Output is bigger in Country B.
D) It is not possible to come to any conclusions with the given information.

Scenario: Assume the Following Aggregate Production Functions for Two Countries