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An economy can produce computers (C) using labor and capital (K). It can also produce food (F) using labor and land (T).
Posted: Mon May 02, 2022 7:54 am
by answerhappygod
- An Economy Can Produce Computers C Using Labor And Capital K It Can Also Produce Food F Using Labor And Land T 1 (100.24 KiB) Viewed 42 times
An economy can produce computers (C) using labor and capital (K). It can also produce food (F) using labor and land (T). The total supply of labor (L) is 100 units. Labor is perfectly mobile between sectors while both capital and land are sector-specific. Production function for producing computers is: Qc = LEK. Production function for producing food is: QF = T. = 1 = Given the supply of capital is K = 4 and the supply of land is T = 16. 1 Same information as in question 1. Additionally, you are given the following information on marginal products of labor. Marginal product of labor for producing computers is MPLc = 4,2KŻ. Marginal product of labor for producing food is MPLE = 2, 3TŻ. = a. The following table illustrates how marginal product of labor for the two goods depend on labor input in each sector. Fill in the blank: MPLC MPLE Labor input to each sector 1 4 9 16 25 36 49 64 81 100 b. Suppose that the price of computers (Pc) is 4 times the price of food (P:). That is, we have Pc = 4PF. Calculate the equilibrium allocation of labor across sectors.