(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
In this question you are going to use a production function to compare output per worker with capital per worker across two different economies.
(Description)
You are hired as an economic consultant to the countries of Albernia and Brittania. Each country's current relationship between physical capital per worker and output per worker is given by the curve labeled "Productivity 1" in the accompanying diagram. Albernia is at point A and Brittania is at point B. On the Figure there is a productivity curve. Horizontal axis corresponds to the physical capital per worker (in dollars). Vertical axis corresponds to real GDP per worker (in dollars). This is a monotonically increasing curve with decreasing steepness of the gradient and it passes through origin and points A with coordinates (10000,20000) and B with coordinates (30000,40000).
(Speaker)
The production function exhibits diminishing returns to physical capital. As capital increases from zero to 10000 dollars, real GDP per worker increases from zero to 20000 dollars.
(Description)
On the Figure there is a productivity curve. This is a monotonically increasing curve with decreasing steepness of the gradient and it passes through origin and points A with coordinates (10000,20000) and B with coordinates (30000,40000). Arrow from origin to 10000 along the Physical capital per worker axis is plotted. Another arrow from origin to 20000 along the Real GDP per worker axis is plotted.
(Speaker)
In order to increase real GDP per worker by another 20000 dollars, the economy must increase capital from 10000 to 30000.
(Description)
On the Figure there is a productivity curve. This is a monotonically increasing curve with decreasing steepness of the gradient and it passes through origin and points A with coordinates (10000,20000) and B with coordinates (30000,40000). Arrow from 20000 to 40000 along the Real GDP per worker axis is plotted. Another arrow from 10000 to 30000 along the Physical capital per worker axis is plotted.
(Speaker)
In other words, the first 20000 dollars was generated with 10000 units of capital, but the next 20000 was generated with 20000 units of capital.