Two Economies Are Identical Except That the Level of Capital

question 12

Multiple Choice

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:

• A) more in Highland.
• B) more in Lowland.
• C) by the same amount in Highland and Lowland.
• D) in Highland, but not in Lowland.

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