-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods.According to the figure,which island will have more rapid economic growth?
A)Neither Hawaii nor Puerto Rico will grow
B)Hawaii
C)Puerto Rico
D)Both Hawaii and Puerto Rico will grow at the same speed
E)More than one of the above answers is correct

Question

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods.According to the figure,which island will have more rapid economic growth?
A)Neither Hawaii nor Puerto Rico will grow 
B)Hawaii 
C)Puerto Rico 
D)Both Hawaii and Puerto Rico will grow at the same speed 
E)More than one of the above answers is correct

Quizplus · Accepted Answer

Puerto Rico has a higher marginal product of capital than Hawaii, so it will have more rapid economic growth.

-Suppose Puerto Rico and Hawaii Currently Have the Same Production