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Consider the hypothetical economies of Hermes and Vanaheim, both of which produce crates of copia using only workers and tools. Suppose that, during the course
Consider the hypothetical economies of Hermes and Vanaheim, both of which produce crates of copia using only workers and tools. Suppose that, during the course of 15 years, the level of physical capital per worker rises by 3 tools per worker in each economy, but the size of each labor force remains the same. Complete the following tables by entering productivity (in terms of output per worker) for each economy in 2021 and 2036. Hermes Physical Capital Labor Force Output Productivity Year ( Tools per worker) (Work Activity Frame s of copia) (Crates per worker) 20 2 1 1 6 80 4, 8 0 0 2036 19 80 5,760 Va na heim Physical Capital Labor Force Output Productivity Year ( Tools per worker) (Workers) (Crates of copia) (Crates per worker) 20 2 1 1 9 80 6, 4 0 0 2036 22 80 6,880 Initially, the number of tools per worker was lower in Hermes than in Vanaheim. From 2021 to 2036, capital per worker rises by 3 units in each country. The 3-unit change in capital per worker causes productivity in Hermes to rise by a V amount than productivity in Vanaheim. This illustrates the V effect
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