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Suppose that computers use two units of capital for each worker, so that KC = 2LC, while shoes use 0.5 units of capital for each worker, so that KS = 0.5LS. There are 100 workers and 100 units of capital in the economy. (a) Solve for the amount of labour and capital used in each industry. (b) Suppose the number of workers increases to 125 due to immigration, keeping total capital fixed at 100. Again, solve for the amount of labour and capital used in each industry. (c) Suppose the amount of capital increase to 125 due to FDI, keeping the total number of workers fixed at 100. Solve for the amount of labour and capital used in each industry, again. (d) Explain how your results in (b) and (c) relate to the Rybczynski theorem

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91423206

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