Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods. a. Calculate each country's productivity and real GDP per person. b. Which country is better off?

a) Productivity of country A = 20 goods per hour

Productivity of country B = 25 goods per hour

Real GDP per person for country A = 128 goods per person

Real GDP per person for country B = 135 goods per person

b) Country B is better off

Explanation:

Data provided in the question:

For country A

Population = 1,000

Number of workers = 800

Number of working hour per day = 8

Final goods = 128,000

For country B

Population = 2,000

Number of workers = 1,800

Number of working hour per day = 6

Final goods = 270,000

Now,

(a) The Productivity is given as

= [ Total Output : Total Productive Hours ]

Thus,

Productivity of country A

= [ 128,000] : [ 800 * 8 ]

= 20 goods per hour

Productivity of country B

= [ 270,000 ] : [ 1800 * 6 ]

= 25 goods per hour

and,

Real GDP per person = [ Final goods ] : [ Population ]

Real GDP per person for country A

= 128000 : 1000

= 128 goods per person

Real GDP per person for country B

= [ 270000 ] : 2000

= 135 goods per person

(b) Since,

The Real GDP per person for country B is greater than the Real GDP per person for country A

Therefore,

Country B is better off