Question

Two economies are identical except that the level of capital per worker is higher in Highland than in Lowland. The production functions in both economies exhibit diminishing marginal product of capital. An extra unit of capital per worker increases output per worker:

Answer 1

An extra unit of capital per worker increases output per worker MORE IN LOWLAND compared to Highland

Step-by-step explanation:

The economies of highland and lowland are identical.

They both have different level of capital per worker.

The level of capital in Highland is higher.

Production function in the two economies exhibit diminishing marginal product of capital.

An extra unit of capital per worker increases output per worker more in lowland compared to Highland because of the higher level of capital in Highland.