Answer-first summary for fast verification
Answer: Country 3
## Explanation Capital deepening refers to an increase in the capital-to-labor ratio. To determine which country would experience the greatest increase in per capita economic growth from capital deepening, we need to calculate the capital-to-labor ratio for each country: - **Country 1**: $1,240 billion / 18 million = $68,889 per worker - **Country 2**: $1,600 billion / 37 million = $43,243 per worker - **Country 3**: $560 billion / 15 million = $37,333 per worker Country 3 has the lowest capital-to-labor ratio ($37,333), which means it has the most room for improvement through capital deepening. Countries with lower initial capital-to-labor ratios typically experience greater marginal productivity gains from additional capital investment, leading to higher per capita economic growth. This is based on the principle of diminishing marginal returns to capital - when capital is scarce relative to labor, each additional unit of capital yields higher productivity gains.
Author: LeetQuiz Editorial Team
Ultimate access to all questions.
An analyst gathers the following economic data about three countries:
| Country | Size of Workforce | Total Capital |
|---|---|---|
| Country 1 | 18 million | $1,240 billion |
| Country 2 | 37 million | $1,600 billion |
| Country 3 | 15 million | $560 billion |
All else being equal, which country would most likely experience the greatest increase in per capita economic growth as a result of capital deepening?
A
Country 1
B
Country 2
C
Country 3
No comments yet.