Answer :
Final Answer
The increase in capital per worker by 5 units from 2016 to 2056 led to a greater rise in productivity in Blahnik compared to Gobbledigook, even though Blahnik initially had a higher number of tools per worker. This demonstrates the impact of capital on productivity growth.
Explanation
The observed phenomenon can be attributed to the concept of diminishing marginal returns. Initially, Blahnik had a higher number of tools per worker, implying a higher capital-to-labor ratio than Gobbledigook. However, as both countries increased their capital per worker by the same amount over the specified time period, the marginal benefit of each additional unit of capital decreased.
Blahnik's higher starting capital level meant it was closer to the point of diminishing returns, where adding more capital provides progressively smaller productivity gains. Conversely, Gobbledigook's lower initial capital level allowed it to experience relatively larger productivity improvements per unit of added capital.
The phenomenon is also related to the differences in technological progress and efficiency of capital utilization between the two countries. If Blahnik's technology advanced at a faster rate or if its capital was used more efficiently, the increase in capital could lead to even greater productivity gains.
In essence, this scenario illustrates how the impact of additional capital on productivity growth can vary based on the initial capital levels, efficiency of capital utilization, and technological advancements in different countries.
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