LABOR-INTENSIVE GOODS 10 9 8 1 0 0 1 2 3 4 7 CAPITAL-INTENSIVE GOODS 5 6 8 Once trade begins, the price of labor in Tomczakistan 9 10 New Production In Leightvania, the price of labor stays the same decreases increases

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

answer the following and please explain if possible !

+ where do i exactly put the new production (green line) on the graph. if needed.

Thank you

Note:- 

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

LABOR-INTENSIVE GOODS
10
9
8
7
6
01
3
2
1
0
0 1
2
A
+
3 4 5 6 7
CAPITAL-INTENSIVE GOODS
8
Once trade begins, the price of labor in Tomczakistan
9
10
A-
New Production
(?)
. In Leightvania, the price of labor
stays the same
decreases
increases
Transcribed Image Text:LABOR-INTENSIVE GOODS 10 9 8 7 6 01 3 2 1 0 0 1 2 A + 3 4 5 6 7 CAPITAL-INTENSIVE GOODS 8 Once trade begins, the price of labor in Tomczakistan 9 10 A- New Production (?) . In Leightvania, the price of labor stays the same decreases increases
4. Factor-price equalization
The fictional country of Tomczakistan is a nation that is relatively rich in labor resources. It can produce two types of goods, capital-intensive goods
and labor-intensive goods. Tomczakistan's production possibilities frontier (PPF) is shown on the following graph.
Currently, Tomczakistan is closed to international trade and producing at the grey point (star symbol) labeled A on the graph. Suppose that
Tomczakistan is going to trade with Leightvania, a country that is relatively rich in capital and was also previously closed to international trade.
On the following graph, use the green point (triangle symbol) to indicate which way Tomczakistan will adjust its production by placing it on one of
the two black points (plus symbol). Dashed droplines will automatically extend to both axes.
Transcribed Image Text:4. Factor-price equalization The fictional country of Tomczakistan is a nation that is relatively rich in labor resources. It can produce two types of goods, capital-intensive goods and labor-intensive goods. Tomczakistan's production possibilities frontier (PPF) is shown on the following graph. Currently, Tomczakistan is closed to international trade and producing at the grey point (star symbol) labeled A on the graph. Suppose that Tomczakistan is going to trade with Leightvania, a country that is relatively rich in capital and was also previously closed to international trade. On the following graph, use the green point (triangle symbol) to indicate which way Tomczakistan will adjust its production by placing it on one of the two black points (plus symbol). Dashed droplines will automatically extend to both axes.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

Blurred answer
Knowledge Booster
Limited Cognitive Power
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education