2. Cross country comparisons of labor productivity. Show all work, LABEL carefully and NOTE UNITS.Real CapitalStock, K(in millions ofUS Dollars)Capital-Country(2019)LaborReal GDPTotalMPKproductivityFunctionper hourRatio, y(to 3decimals)laborLaborhours, L(millionsof hours)33,217.0Ratio, kArgentinaВ.3,399,148.5А.С.y =3.66k0.45SpainВ.11,733,525.030,649.9A.C.y =4.26k0.45Suppose that Argentina and Spain have the labor productivity functions, real capital stock, and total labor hoursgiven in the table above.A. Calculate the capital-labor ratio, k (round to 2 decimals).Argentina:Spain:B. Calculate real GDP per hour, y (round to 2 decimals).Argentina:Spain:C. Calculate the marginal product of capital, MPK (round to 3 decimals).Argentina:Spain:D. Graph the labor productivity functions for each country on the graph below. Include all relevant informationfrom A-C above, and label your graph carefully (need not be to scale).E. If the MPK for Argentina converges to the MPK for Spain, calculate the new level of k in Argentina. Explainwhether labor productivity and the capital-labor ratio will also converge.

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2. Cross country comparisons of labor productivity. Show all work, LABEL carefully and NOTE UNITS.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 35P: Say that the average worker in the U.S. economy is eight times as productive as an average worker in...

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Question

2. Cross country comparisons of labor productivity. Show all work, LABEL carefully and NOTE UNITS.
Real Capital
Stock, K
(in millions of
US Dollars)
Capital-
Country
(2019)
Labor
Real GDP
Total
MPK
productivity
Function
per hour
Ratio, y
(to 3
decimals)
labor
Labor
hours, L
(millions
of hours)
33,217.0
Ratio, k
Argentina
В.
3,399,148.5
А.
С.
y =
3.66k0.45
Spain
В.
11,733,525.0
30,649.9
A.
C.
y =
4.26k0.45
Suppose that Argentina and Spain have the labor productivity functions, real capital stock, and total labor hours
given in the table above.
A. Calculate the capital-labor ratio, k (round to 2 decimals).
Argentina:
Spain:
B. Calculate real GDP per hour, y (round to 2 decimals).
Argentina:
Spain:
C. Calculate the marginal product of capital, MPK (round to 3 decimals).
Argentina:
Spain:
D. Graph the labor productivity functions for each country on the graph below. Include all relevant information
from A-C above, and label your graph carefully (need not be to scale).
E. If the MPK for Argentina converges to the MPK for Spain, calculate the new level of k in Argentina. Explain
whether labor productivity and the capital-labor ratio will also converge.

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