How has change in capital-labor ration affected efficiency

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Reference no: EM13833274

The country Panjim has been growing at the rate of 8 percent annually following a series of economic growth reforms. Adelphia, a neighboring country, is also growing rapidly, but at a rate that is slightly lower than Panjim's, Elaine Mack and Prisca Baresi, who live in Adelphia, are discussing whether Adelphia's economy will surpass Panjim soon. Elaine is of the opinion that the high level of sales of capital goods indicates that growth in Adelphia will only increase further. Prisca, however reminds Elaine that the working population in Adelphia is shrinking, which will reduce its growth prospects.

Elaine claims that the high level of sales of capital goods indicates that growth in Adelphia will only increase further. Which of the following questions is most important to answer in order to determine the accuracy of this claim?

a. How has the change in capital-labor ration affected efficiency?

b. What proportion of investment in Adelphia is funded by foreign capital?

c. Is the capital-goods industry subsidized by the government?

d. How mature is the market for financial capital in Adelphia?

e. Does Adelphia manufacture capital goods domestically or import them?

Reference no: EM13833274

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