Answer :
To achieve the highest capital-to-labor ratio with 5 million units of physical capital, Capitalania should employ the smallest number of workers, which in this case is 300,000 workers (option d), resulting in the highest ratio of approximately 16.67.
If the country of Capitalania has 5 million units of physical capital, the amount of labor that would generate the highest capital-to-labor ratio would be the smallest workforce, because the capital-to-labor ratio is calculated by dividing the amount of capital by the number of workers. Of the options given:
- 500,000 workers result in a ratio of 10 (5,000,000 / 500,000)
- 1 million workers result in a ratio of 5 (5,000,000 / 1,000,000)
- 700,000 workers result in a ratio of approximately 7.14 (5,000,000 / 700,000)
- 300,000 workers result in the highest ratio of approximately 16.67 (5,000,000 / 300,000)
Therefore, option d) 300,000 workers would generate the highest capital-to-labor ratio.
