What is (are) possible explanation(s) for the correlation between capital per worker and production efficiency? a. Production efficiency encourages capital accumulation. b. Capital accumulation has externalities that raise efficiency. c. A third, unknown variable causes capital accumulation and efficiency to be higher in some countries than others.
Added by Javier D.
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- When a country or firm is able to produce goods and services more efficiently, they are likely to generate higher profits. These profits can then be reinvested into acquiring more capital, such as machinery, technology, or infrastructure, which in turn can Show more…
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