Consider the following three countries that produce GDP this way: Y = 5K Ilia: K = 100
Question:
Y = 5√K
Ilia: K = 100 machines
Caplania: K = 10,000 machines
Hansonia: K = 1,000,000 machines
What will GDP (Y) be in these three countries? Hansonia has 10,000 times more machines than Ilia, so why isn’t it 10,000 times more productive?
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Ilia will produce 50 units of output Caplania will produce 500 ...View the full answer
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