Consider Two Countries, Labeled 1 and 2 $Y = \bar { A } _ { i } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$

question 102

Multiple Choice

Consider two countries, labeled 1 and 2. Each has the production function $Y = \bar { A } _ { i } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , i = 1, 2. If the only difference between the two countries is that A₁ > A₂,

• A) Country 2 will not produce anything, ceteris paribus.
• B) Country 2 will produce more than Country 1, ceteris paribus.
• C) Country 1 will produce more than Country 2, ceteris paribus.
• D) Each will produce the same amount, ceteris paribus.
• E) Not enough information is given.

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