Production possibilities. If the supply of capital falls by10 percent and the supply of labor increases by 10 percent, how will the PPF for wheat and cloth change?
Production possibilities. If the supply of capital falls by10 percent and the supply of labor increases by 10 percent, how will the PPF for wheat and cloth change?
Chapter21: International Trade
Section: Chapter Questions
Problem 1QP
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Production possibilities. If the supply of capital falls by10 percent and the supply of labor increases by 10 percent, how will the
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Step 1
If it is supposed that capital in form of land is used to produce wheat and labor is used to produce cloth.
When the supply of capital decreases by 10%, the supply of wheat would also be decreased by 10%. When the supply of labor increases by 10%, the supply of cloth is increased by 10%.
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