Question

Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.

a. Calculate each country's productivity and real GDP per person.
b. Which country is better off?

Answer 1

A. Productivity

Country A = 20 goods per hour

Country B = 25 goods per hour

Country A = 128 goods per person

Country B = 135 goods per person

Country b is better off

Step-by-step explanation:

Productivity = Total output / total productive hours

For country A = 128,000 / (800 × 8) = 20 goods per hour

For country B = 270,000 / ( 1800 x 6) = 25 goods per hour.

Real GDP per person = Total output/ total population

For country A = 128,000 / 1000 = 128 goods per person

For country B = 270,000 / 2,000 = 135 goods per person

Country B is better off because its real GDP per person is higher when compared with country B.

I hope my answer helps you