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Question:
Consider the economies of Hermes and Gribinez, both of which produce gaggles of gop using
only tools and workers. Suppose that, during the course of 10 years, the level of physical
capital per worker rises by 4 tools per worker in each economy, but the size of each labor
force remains the same.
Complete the following tables by entering productivity (in terms of output per worker) for
each economy in 2016 and 2026
Hermes

Physical Capital (Tools Labor Force Output (Gaggle Productivity (Gaggles

Year
per worker) (Workers) of gop) per worker)

201
11 30 3,000
6

202
15 30 3,600
6

Gribinez

Physical Capital (Tools Labor Force Output (Gaggles Productivity (Gaggles

Year
per worker) (Workers) of gop) per worker)

201
8 30 2,400
6

202
12 30 3,600
6

Initially, the number of tools per worker was higher in Hermes than in Gribinez. From 2016
to 2026, capital per worker rises by 4 units in each country. The 4-unit change in capital per
worker causes productivity in Hermes to rise by a _____ amount than the productivity in
Gribinez. This illustrates the concept of _____ , which makes it _____ for countries with low
output to catch up to those with higher output.
ANS-
Context header: Productivity
Context explanation: Productivity refers to the efficiency of production. It means the
aggregate output is the combined effort of all inputs which termed as productivity. Simply
productivity is the combined efforts of all inputs to produce output in a production process.
Answer and explanation:

Productivity of Hemes
|Year | physical capital per worker | labor force | output | productivity |
|2016 | 11| 30 | 3000 | 100 |
|2026 | 15 |30 | 3600 | 120 |
Productivity of Gribinez
|Year | physical capital per worker | labor force | output | productivity |
|2016 | 8 | 30 | 2400 | 80 |
|2026 | 12 |30 | 3600 | 120 |
Initially, number of the number of tools per worker was higher in Hermes than Gribinez.
From 2016 to 2026, capital per worker rises by 4 units in each country. The 4 units in capital
per worker cause productivity in Hermes to rise by a lesser amount than the productivity in
Gribinez. This illustrates the concept of catch effect, which makes it required the addition of
more capital for country with low output to catch au to those with higher output.