Figure 4.6: Production Function
-Consider the two production functions in Figure 4.6, representing two countries. Which of the following is true?
i. At points a and b, each country has the same per capita capital stock but different factor
Productivity.
ii. Points a and c represent the same country but with different factor productivity.
iii. Points b and d represent the same country but with different stock of per capita capital.
A) i and iii
B) i only
C) ii only
D) iii only
E) i and ii

Question

Figure 4.6: Production Function 
-Consider the two production functions in Figure 4.6, representing two countries. Which of the following is true?
i. At points a and b, each country has the same per capita capital stock but different factor
Productivity.
ii. Points a and c represent the same country but with different factor productivity.
iii. Points b and d represent the same country but with different stock of per capita capital.
A) i and iii 
B) i only 
C) ii only 
D) iii only 
E) i and ii

Quizplus · Accepted Answer

i. If two countries have the same per capita capital stock at points a and b but are located on different production functions, this indicates a difference in factor productivity between the two countries. ii. Points a and c cannot represent the same country with different factor productivity if they are on different production functions; this would typically indicate different countries or fundamentally different economic conditions. iii. Points b and d representing the same country but with different stock of per capita capital suggests a movement along the same production function, indicating a change in capital stock while maintaining the same level of factor productivity.