Chapter 20, Problem 35P

### Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

Chapter
Section

### Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

# Say that the average worker in the U.S. economy is eight times as productive as an average worker in Mexico. If the productivity of U.S. workers grows at for years and the productivity of Mexico’s workers grows at for years, which country will have higher worker productivity at that point?

To determine

The country that will have higher worker productivity is to be determined.

Explanation

Let us assume that the U.S. worker produces $80 per hour and the Mexican worker produces$10 per hour.

In 25 years, average productivity in each country will be:

In the U.S.:

$80(1.02)25 =$80(1.64) = \$131

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