Question

Production function approach-Different productivity levels.

7. Production function approach Different productivity levels Aa Ad Suppose that the level of GDP per worker is $15,000 in Indonesia and $50,000 in the United States. The following graph shows the production functions for Indonesia (PFIN) and the United States (PFus). The output per worker (q) and capital per worker (k) are measured relative to their levels in the United States. So, for the United States, q and k are always equal to one. Notice that, due to lower productivity in Indonesia, its level of output per worker is below that in the United States at any given level of capital per worker Use the purple point (dianond symbol) to indicate the levels of output per worker and capital per worker in Indonesia relative to the United States. Dashed droplines will automatically extend to both axes. OUTPUT PER WORKER,qIU.S-1 US O.B Indonesia-Equil 0.6 0.4 IN 0.2 0.D 0.2 0.4 0.8 CAPITAL PER WORKER,k IU.S.-1) Help Clear All The following graph shows the marginal product of capital curves for Indonesia (MPKIN) and the United States (MPKus) that correspond to the production functions on the previous graph. Both k and MPK are measured relative to their levels in the United States, so for the United States, k and MPK are always equal to one. Use the purple point (diamond symbol) to indicate the level of capital per worker and the marginal product of capital in Indonesia relative to the United States. 5.D Indonesia-Equil MPKIN 2.D O.D 0.2 D.4 0.8 CAPITAL PER WORKER, kIU.S. 1) HelpClear AlL You analysis in the previous parts suggests that capital will fiow from the two countries are equal and the global capital market is in equilibrium. until the returns on investment in Use the red point (cross symbol) on the previous graph to indicate the marginal product of capital and the level of capital per worker in Indonesia at which the global capital market will be in equilibrium (the point at which the retum on investment in Indonesia equals that in the United States). Now return to the first graph. Use the red point (cross symbol) to indicate the levels of output per worker and capital per worker in Indanesia relative to the United States when the global capital market is in equilibrium Your analysis suggests that when the glabal capital market reaches equilibrium, the level of capital per worker in Indonesia is of that in the United States, and the level of output per worker in Indonesia is of that in the United Timeo

Answer 1

US (unites state) to Indonesia because US has a higher GDP pertaining due capital higher level

30 % of united state

30 % of united state