Consider a small island country whose only industry is printing. The following table presents information about this small economy in two different years. Complete the table by calculating physical capital per worker and labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Physical Capital Labor Force Physical Capital per Worker Labor Hours Output Labor Productivity Year (Printing presses) (Workers) (Printing presses) (Hours) (Books) (Books per hour of labor) 2025 120 60 3,000 21,000 2026 400 100 3,500 49,000

Exhibit 2-18 Production possibilities curves CONSUMPTION GOODS PRODUCTION Year X B CAPITAL GOODS PRODUCTION Year Y In Exhibit 2-18, the production possibilities curves for a country are shown for Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country: O is producing the same number of capital goods in both years. O is producing the same number of consumption goods in both years. O has shown no growth between Year X and Year Y. Ohas higher unemployment in Year X than in Year Y.

Consider the hypothetical economies of Thalassa and Svarta, both of which produce crates of copia using only workers and tools. Suppose that, during the course of 30 years, the level of physical capital per worker rises by 5 tools per worker in each economy, but the size of each labor force remains the same. Complete the following tables by entering productivity (in terms of output per worker) for each economy in 2019 and 2049. Year 2019 2049 Year 2019 2049 Physical Capital (Tools per worker) 14 19 Physical Capital (Tools per worker) 11 16 Labor Force (Workers) 60 60 Labor Force (Workers) 60 60 Thalassa Output (Crates of copia) 3,600 4,320 Svarta Output (Crates of copia) 1,800 3,240 Productivity (Crates per worker) Productivity (Crates per worker) Initially, the number of tools per worker was higher in Thalassa than in Svarta. From 2019 to 2049, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Thalassa to rise by a…

Consider the economies of Sporon and Gobbledigook, both of which produce gobs of goo using only tools and workers. Suppose that, during the course of 20 years, the level of physical capital per worker rises by 5 tools per worker in each economy, but the size of each labor force remains the same.   Complete the following tables by entering productivity (in terms of output per worker) for each economy in 2015 and 2035.   Sporon Year Physical Capital (Tools per worker) Labor Force (Workers) Output (Gobs of goo) Productivity (Gobs per worker) 2015 11 30 1,800   2035 16 30 2,160     Gobbledigook Year  Physical Capital (Tools per worker) Labor Force (Workers) Output (Gobs of goo) Productivity (Gobs per worker) 2015 8 30 900   2035 13 30 1,620     Initially, the number of tools per worker was higher in Sporon than in Gobbledigook. From 2015 to 2035, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker…