Fruit canning plants in Malaysia are relatively labor intensive and those in the US are relatively capital intensive. An economist would say: Malaysia has a lower income than the US because it doesn't employ enough capital in production. one of these plants must have selected an incorrect technology for canning fruit. firms select methods of production to reflect relative factor prices in their locations. economists would be stumped to explain such a discrepancy.

Fruit canning plants in Malaysia are relatively labor intensive and those in the US are relatively capital intensive. An economist would say: Malaysia has a lower income than the US because it doesn't employ enough capital in production. one of these plants must have selected an incorrect technology for canning fruit. firms select methods of production to reflect relative factor prices in their locations. economists would be stumped to explain such a discrepancy.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Fruit canning plants in Malaysia are relatively labor intensive and those in the US are relatively
capital intensive. An economist would say:
Malaysia has a lower income than the US because it doesn't employ enough capital in production.
one of these plants must have selected an incorrect technology for canning fruit.
: : :
firms select methods of production to reflect relative factor prices in their locations.
economists would be stumped to explain such a discrepancy.

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