4. The catch-up effect Consider the economies of Hermes and Gribinez, both of wh

Question

4. The catch-up effect Consider the economies of Hermes and Gribinez, both of which produce gaggles of gop using only tools and workers. Suppose that, during the course of 20 years, the level of physical capital per worker rises by 5 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 2019 and 2039. Hermes Physical Capia Labor Force (Tools per worker) Productivity (Gaggles per worker) Year 2019 2039 (Workers) 30 30 Output (Gaggles of gop) 1,800 2,160 16 Gribinez Physical Capia Labor Force (Tools per worker) Output (Gaggles of gop) Productivity (Gaggles per worker) Year 2019 2039 (Workers) 30 30 900 13 1,620 Initially, the number of tools per worker was higher in Hermes than in Gribinez. From 2019 to 2039, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Hermes to rise by a illustrates the amount than productivity in Gribinez. This effect. Grade It Now Save & Continue Continue without saving

Explanation / Answer

Question 1). Solution :- Productivity (Gaggles per worker) = Output / Labor Force.

Country Hermes :-

Country Gribinez :-

Question 2). Answer :- Smaller, Diminishing returns.

Note :- "Smaller" will appear in the first blank in the given question and "Diminishing returns" will appear in the second blank in the given question.

Year Productivity (Gaggles per worker) 2019 1800 / 30 = 60. 2039 2160 / 30 = 72

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