Workland Has a Population of 10,000, of Whom 7,000 Work

question 37

Multiple Choice

Workland has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final goods. Laborland has a population of 5,000, of whom 4,000 work 12 hours a day to produce a total of 120,000 final goods.

• A)Workland has higher productivity and higher real GDP per person than Laborland.
• B)Workland has higher productivity but lower real GDP per person than Laborland.
• C)Workland has lower productivity but higher real GDP per person than Laborland.
• D)Workland has lower productivity and lower real GDP per person than Laborland.

---

Definitions:

New Equity

Refers to the issuance of shares by a company to raise capital, which dilutes existing ownership but can provide funds for expansion or debt reduction.

Constant Growth

A steady and unchanging rate at which the value or size of something increases over a specific period.

Flotation Costs

The total costs incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Cost of Equity

The return a company theoretically pays to its equity investors as a reward for taking on the risk of investing in the company.