The economy of Ouratricot has 50 units oflabor and 30 units of capital. Ouratricot has aproduction unit that produces knitted goodswith a technology described by theproduction function QT=min{2KT,LT} whereQT is the quantity of knitted goods produced,KT is the quantity of capital used in the knittedgoods production unit, and LT is the quantityof labor used in the knitted goods productionunit. Ouratricot has a production unit thatproduces Ouras with a technology describedby the production functionQO=min{KO,LO}where QO is the quantity of Ouras produced,KO is the quantity of capital used in theproduction unit of Ouras, and LO is thequantity of labor used in the production unitof Ouras.Find all of the capital and wage allocationsbetween the two production units that arelikely to be part of an optimal allocation in thesense of Pareto in the economy of Ouratricot.Justify your answer with precision and clarity.

As given in the question: Units of labor = 50 Units of Capital = 30 Production Function: QT =…

Find all of the capital and wage allocations between the two production units that are likely to be part of an optimal allocation in the sense of Pareto in the economy of Ouratricot. Justify your answer with precision and clarity.

Find all of the capital and wage allocations between the two production units that are likely to be part of an optimal allocation in the sense of Pareto in the economy of Ouratricot. Justify your answer with precision and clarity.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The economy of Ouratricot has 50 units of
labor and 30 units of capital. Ouratricot has a
production unit that produces knitted goods
with a technology described by the
production function QT=min{2KT,LT} where
QT is the quantity of knitted goods produced,
KT is the quantity of capital used in the knitted
goods production unit, and LT is the quantity
of labor used in the knitted goods production
unit. Ouratricot has a production unit that
produces Ouras with a technology described
by the production functionQO=min{KO,LO}
where QO is the quantity of Ouras produced,
KO is the quantity of capital used in the
production unit of Ouras, and LO is the
quantity of labor used in the production unit
of Ouras.
Find all of the capital and wage allocations
between the two production units that are
likely to be part of an optimal allocation in the
sense of Pareto in the economy of Ouratricot.
Justify your answer with precision and clarity.

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