Scenario: Assume the Following Aggregate Production Functions for Two Countries

question 26

Multiple Choice

Scenario: Assume the following aggregate production functions for two countries, A and B, respectively.
YA=A KA¹/² ᴴA¹/²
ʸB=A KB²/³ ᴴB¹/³
-Refer to the scenario above.Assume Country A and Country B have equal technology and human capital stock,but Country A's capital stock is 10 percent bigger than Country B's capital stock.What can you say about output in the two countries?

• A) Output is exactly equal in Country A and Country B.
• B) Output is bigger in Country A.
• C) Output is bigger in Country B.
• D) It is not possible to come to any conclusions with the given information.

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Definitions:

Contrary

Logically opposite, exhibiting contrast in a particular quality without being completely different.

Subcontrary

In logic, propositions that cannot both be false, but can both be true, especially within the square of opposition.

Subalternate

In classical logic, the term for propositions that are related in such a way that the truth of one implies the truth of the other.

Existential Import

The implication that some individuals fitting the criteria exist when making a particular proposition.