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.Sweetland and Sourland face identical production functions and have the same amounts of inputs available for production.GDP per capita is $45,000 in Sourland and $38,000 in Sweetland.Which of the following statements could help explain this discrepancy?
A) The population of Sourland is more productive.
B) Sweetland faces the Law of Diminishing Marginal Product.
C) Sourland has greater efficiency of production.
D) The workforce is smaller in Sourland.

Question

Quizplus · Accepted Answer

The fact that both countries face identical production functions and have the same amounts of inputs available implies that the difference in GDP per capita can be attributed to differences in production efficiency. Therefore, option C is the most likely explanation for the discrepancy.

Scenario: Two Neighboring Countries, Sweetland and Sourland, Are Identical in Terms