For the Solow Model to Accurately Explain the Observed Divergence

question 7

Multiple Choice

For the Solow model to accurately explain the observed divergence of growth experience around the world would require

• A) differences in savings rates across countries.
• B) differences in population growth rates across countries.
• C) barriers to the introduction of new technologies.
• D) inadequate educational opportunities in poor countries.
• E) differences in consumption per worker.

---

Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing, like utility costs for the factory, depreciation of manufacturing equipment, and factory management salaries.

Fixed Manufacturing Overhead

Costs in the manufacturing process that do not change with production volume, such as rent for the factory, salaries of permanent staff, and insurance.

Direct Labor-hours

The total hours worked directly on goods or services by employees, used to allocate labor costs to products or jobs.

Unit Product Cost

The total cost (both fixed and variable) associated with producing one unit of a product.