Consider a world composed of two countries, U.S as Home and Malaysia as Foreign. U.S and Malaysia both are producing two goods for machines and pants. Assume that Malaysia is capital abundant and machines are capital intensive.
Based on the given scenario, answer all the questions.
Consider a world composed of two countries, U.S as Home and Malaysia as Foreign. U.S and Malaysia both are producing two goods for machines and pants. Assume that Malaysia is capital abundant and machines are capital intensive.
a) What is(are) the factor of production that used in the production?
b) With a help of a diagram, explain how the change in the relative
c) With a help of a diagram, explain how levels of output change when the economy’s resources change [Hints, normally use relative price of goods for capital abundant or labor intensive].
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