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1. Suppose there are two goods, Machines (M) and Food (F), and three factors of production...
A small country produces only two goods, cars and computers. Given its limited resources, this country...
A small country produces only two goods, cars and computers. Given its limited resources, this country has the following production possibilities: Cars Computers 0 200 25 180 50 130 75 70 100 0 Draw the PPF. Suppose car production uses mainly machines (capital) and computer production uses mainly labor. Show what happens to the PPF when the amount of capital increases but labor remains unchanged.
Heckscher-Ohlin model Country A produces cellphone (C) and food (F) with capital and labor. Both sectors...
Heckscher-Ohlin model Country A produces cellphone (C) and food (F) with capital and labor. Both sectors are perfect competitive. Capital (K) and labor (L) are not substitutable with each other. Thus, unit capital requirement and unit labor requirement are fixed. ??? = 3, ??? = 1, ??? = 2, ??? = 4, where ??? is the number of units of K-capital required to produce and unit of C-cellphone. a. Which sector is relatively capital intensive? Which sector is relatively labor...
7. An economy produces two goods, food (F) and manufacturing (M). Food is produced by the...
7. An economy produces two goods, food (F) and manufacturing (M). Food is produced by the production function F = (Lp)? (T), where Ly is the labour employed, T is the amount of land used and F is the amount of food produced. Manufacturing is produced by the production function M = (Lx)2(K), where Ly is the labour employed, K is the amount of capital used and M is the amount of manufacturing production. Labour is perfectly mobile between the...
Suppose Elmira is a small country that produces two goods, grain and novels, with two factors...
Suppose Elmira is a small country that produces two goods, grain and novels, with two factors of production, unskilled labor (L) and skilled labor (L). Both factors are completely mobile between the two sectors of production in the long run. In the medium run, skilled labo is specific to its sector. That is, it takes time to retrain and acquire new skills in order to move between the two sectors in the economy The production of grain is relatively intensive...
The specific factors model 1) Consider a family of farmers. Grandma owns the machinery necessary to...
The specific factors model
1) Consider a family of farmers. Grandma owns the machinery
necessary to produce corn, while Grandpa owns the machinery
necessary to produce soybeans. Their children carry out the work
required to produce both corn and soybeans. Assume that production
functions for the two goods are concave in labor.
(a) Starting with the profit maximizing condition w = P × M P L,
derive the diagram we have introduced in class. In the diagram,
show the areas...
Buzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available: Food...
Buzz Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available: Food Processors Espresso Makers Sales price $125 $265 Variable costs $50 $170 The company can manufacture either two food processors per machine hour or three espresso machines per machine hour. The company's production capacity is 1,400 machine hours per month. The company has demand of 2,700 espresso machines. How many espresso machines and food processors should they produce based on demand and available machine hours?...
(a) Draw the PPF for Home and for Foreign (on separate graphs). Put production of food...
(a) Draw the PPF for Home and for Foreign (on separate graphs).
Put production of food on the x-axis. 5 (b) Which country has the
comparative advantage in food production? Which has the comparative
advantage in drink production? (c) Draw the world supply of food
relative to drinks (the world relative supply curve) (d) Suppose
that the PF ood = $2/pound, and PDrinks = $5/gallon. Draw new PPFs
for Home and Foreign after trade is allowed. How can we tell...
1. Country Z has an economy that produces two goods: Food (A) and Housing (B). These...
1. Country Z has an economy that produces two goods: Food (A) and Housing (B). These goods require the use of two resources. A unit of Food requires the use of 2 units of labor and 4 units to capital while one unit of housing requires the use of three (3) units of labor and five (5) units of capital. Country Z only has 150 units of labor and 200 units of capital available. Dl BL A. Use the above...
Question 7 rding to the production function: uses labor and machines to produce output according to...
Question 7 rding to the production function: uses labor and machines to produce output according to the where Lis ALK) = 41/212, ere is the number of units of labor used and K is the amount of capita or is $40 per unit and the cost of employing capital is $10 per unit. mount of capital employed. The cost (0): On the graph below, draw an isocost line for this firm that includes combin capital and labor that cost $400...
Consider an economy that can produce two goods, manufactures and food. Manufactures are produced using capital...
Consider an economy that can produce two goods, manufactures and
food. Manufactures are produced using capital and labor. Food is
produced using land and labor. The total supply of labor is 20
units. Given the supply of capital and land, the marginal products
of labors are as follows:
Suppose that the price of manufactures is 2 and the price of
food is 1.
A.Determine graphically and algebraically the wage rate and the
allocation of labor between the two sectors
B.Calculate,...
7. An economy produces two goods, food (F) and manufacturing (M). Food is produced by the production function F = (Lp)? (T), where Ly is the labour employed, T is the amount of land used and F is the amount of food produced. Manufacturing is produced by the production function M = (Lx)2(K), where Ly is the labour employed, K is the amount of capital used and M is the amount of manufacturing production. Labour is perfectly mobile between the...
Suppose Elmira is a small country that produces two goods, grain and novels, with two factors of production, unskilled labor (L) and skilled labor (L). Both factors are completely mobile between the two sectors of production in the long run. In the medium run, skilled labo is specific to its sector. That is, it takes time to retrain and acquire new skills in order to move between the two sectors in the economy The production of grain is relatively intensive...
The specific factors model
1) Consider a family of farmers. Grandma owns the machinery
necessary to produce corn, while Grandpa owns the machinery
necessary to produce soybeans. Their children carry out the work
required to produce both corn and soybeans. Assume that production
functions for the two goods are concave in labor.
(a) Starting with the profit maximizing condition w = P × M P L,
derive the diagram we have introduced in class. In the diagram,
show the areas...
(a) Draw the PPF for Home and for Foreign (on separate graphs).
Put production of food on the x-axis. 5 (b) Which country has the
comparative advantage in food production? Which has the comparative
advantage in drink production? (c) Draw the world supply of food
relative to drinks (the world relative supply curve) (d) Suppose
that the PF ood = $2/pound, and PDrinks = $5/gallon. Draw new PPFs
for Home and Foreign after trade is allowed. How can we tell...
1. Country Z has an economy that produces two goods: Food (A) and Housing (B). These goods require the use of two resources. A unit of Food requires the use of 2 units of labor and 4 units to capital while one unit of housing requires the use of three (3) units of labor and five (5) units of capital. Country Z only has 150 units of labor and 200 units of capital available. Dl BL A. Use the above...
Question 7 rding to the production function: uses labor and machines to produce output according to the where Lis ALK) = 41/212, ere is the number of units of labor used and K is the amount of capita or is $40 per unit and the cost of employing capital is $10 per unit. mount of capital employed. The cost (0): On the graph below, draw an isocost line for this firm that includes combin capital and labor that cost $400...
Consider an economy that can produce two goods, manufactures and
food. Manufactures are produced using capital and labor. Food is
produced using land and labor. The total supply of labor is 20
units. Given the supply of capital and land, the marginal products
of labors are as follows:
Suppose that the price of manufactures is 2 and the price of
food is 1.
A.Determine graphically and algebraically the wage rate and the
allocation of labor between the two sectors
B.Calculate,...
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