One of the main production advantages of the steam engine was the ...

[ENagel]

One of the main production advantages of the steam engine was the flexibility of its location.
 
  Indicate whether the statement is true or false

Question 2

On the diagram above, show the quantity of consumption per worker in equilibrium.
 
  If the actual capital per worker were greater than k, would consumption be higher or lower than it is in equilibrium? Describe what would happen in an economy with such a high level of capital per worker.

[smrerig]

Answer to Question 1

True

Answer to Question 2

When capital per worker is above its equilibrium value, output per worker is higher, so each worker has more to consume. Total saving/investment is higher, as well, but not enough to replace the capital lost to depreciation. As a result, capital per worker is falling, which brings output and consumption down to their equilibrium levels.

[ENagel]

Correct answers!

[smrerig]

Great! Please up vote