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Suppose an economy uses only two inputs in production: capital and labor. The following table describes a production function, where y stands for output per

Suppose an economy uses only two inputs in production: capital and labor. The following table describes a production function, where y stands for output per worker and k is capital per worker.

Suppose there are two countries, A and B. The economies of the two countries can be described by this production function. If Country A has initially a capital-labor ratio k = 0.167 and Country B has k = 0.412, show that an equal increase in capital produces more extra output in country A than in Country B.

Explain with words (computations) + graph

y

k

0.000

0.000

0.173

0.030

0.302

0.091

0.408

0.167

0.480

0.231

0.535

0.286

0.577

0.333

0.612

0.375

0.642

0.412

0.667

0.444

0.688

0.474

0.707

0.500

0.724

0.524

0.739

0.545

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