Question

Based on what you’ve read and heard in class, DRAW ONE Solow production function, correctly locating where Haiti and France sit. Then, using “rise over run,” show which country is likely to experience a greater “catch up” effect when adding an extra unit of K.

Answer 1

The Haiti economic level or growth level is lower than the France , thus here the marginal productivity of capital is higher in the Haiti relative to the France .

If the additional capital is added, the marginal productivity of capital would be high in Haiti.

Following is the diagram:

In this diagram, the Haiti is at K and France is operating near K* , thus here point below the K* has higher marginal productivity of capital