1. Assume that a "leader country" has real GDP per capita of $40,000, whereas a "follower country" has real GDP per capita of $20,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 7 percent in the follower country. If these rates continue for long periods of time, how many years will it take for the follower country to catch up to the living standard of the leader country? 2. The per-unit cost of an item is its average total cost (= total cost/quantity). Suppose that a new cell phone application costs $100,000 to develop and only $.50 per unit to deliver to each cell phone customer. What will be the per-unit cost of the application if it sells 100 units? 1000 units? 1 million units? 3. Suppose that work hours in New Zombie are 200 in year 1 and productivity is $8 per hour worked. What is New Zombie's real GDP? If work hours increase to 210 in year 2 and productivity rises to $10 per hour, what is New Zombie's rate of economic growth?

1. Assume that a "leader country" has real GDP per capita of $40,000, whereas a "follower country" has real GDP per capita of $20,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 7 percent in the follower country. If these rates continue for long periods of time, how many years will it take for the follower country to catch up to the living standard of the leader country? 2. The per-unit cost of an item is its average total cost (= total cost/quantity). Suppose that a new cell phone application costs $100,000 to develop and only $.50 per unit to deliver to each cell phone customer. What will be the per-unit cost of the application if it sells 100 units? 1000 units? 1 million units? 3. Suppose that work hours in New Zombie are 200 in year 1 and productivity is $8 per hour worked. What is New Zombie's real GDP? If work hours increase to 210 in year 2 and productivity rises to $10 per hour, what is New Zombie's rate of economic growth?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 4P

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