Suppose Nations a and B Begin with the Same Production

question 46

Multiple Choice

Suppose nations A and B begin with the same production functions and the same access to technology, but nation A has only a portion of the capital stock per worker that nation B has. Which of the following statements is false?

• A) Additional capital stock investment will yield a higher return in nation A.
• B) Capital stock per worker will increase in nation A relative to nation B.
• C) The level of capital stock in both nations eventually will be equal.
• D) Income per capita in both nations eventually will be equal.
• E) Capital stock per worker in nation A eventually will equal that of nation B.

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Definitions:

Invention

The creation of a new product, process, or method that has never been made before, through the use of imagination and ingenuity.

Imitation

is the action of using someone or something as a model and attempting to replicate their success or characteristics.

Economies of Scale

Advantages in costs that companies gain by operating at larger scales, resulting in lower cost per unit as the scale expands.

Product Innovation

The process of developing new products or improving existing ones to meet changing consumer needs and preferences.