Consider two countries, A and B. If each country produces using identical production functions, but y_A y_B and k_A = k_B, the total factor productivity of country A equals that of B.

Question

Consider two countries, A and B. If each country produces using identical production functions, but y_A > y_B and k_A = k_B, the total factor productivity of country A equals that of B.

Quizplus · Accepted Answer

The given inequality y_A > y_B implies that country A produces more output per unit of input than country B, despite having the same level of capital. This means that country A has a higher total factor productivity than country B. Therefore, the statement in the question is false.

Consider Two Countries, a and B