Lesotho and Swaziland citizens enjoy Chakalaka and Beer. Suppose that these are the only two products they consume and produce with Chakalaka being relatively more labour-intensive and Beer being relatively more capital-intensive in the production process. Suppose that, as a result of the Southern African Customs Union, all impediments or barriers to trade are lifted, such that these countries can freely trade both goods without any costs. Furthermore, assume that α = 0.8 and ac = 0.2.
Lesotho and Swaziland citizens enjoy Chakalaka and Beer. Suppose that these are the only two products they consume and produce with Chakalaka being relatively more labour-intensive and Beer being relatively more capital-intensive in the production process. Suppose that, as a result of the Southern African Customs Union, all impediments or barriers to trade are lifted, such that these countries can freely trade both goods without any costs. Furthermore, assume that α = 0.8 and ac = 0.2.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assuming that an Entrepreneur knows the price of both these goods and both goods are produced, using the Learner diagram describe how the entrepreneur chooses the costminimising combinations of inputs in the production of both goods based on the neoclassical trade theory.
![Lesotho and Swaziland citizens enjoy Chakalaka and Beer. Suppose that these are the only two
products they consume and produce with Chakalaka being relatively more labour-intensive
and Beer being relatively more capital-intensive in the production process. Suppose that, as a
result of the Southern African Customs Union, all impediments or barriers to trade are lifted,
such that these countries can freely trade both goods without any costs. Furthermore, assume
that ap = 0.8 and ac = 0.2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb509e25c-53e2-4f85-a90f-38d480d4f0c7%2F35c360e0-352a-4fa8-b5a9-f4c4c8d3f0ad%2Fxd662ow_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Lesotho and Swaziland citizens enjoy Chakalaka and Beer. Suppose that these are the only two
products they consume and produce with Chakalaka being relatively more labour-intensive
and Beer being relatively more capital-intensive in the production process. Suppose that, as a
result of the Southern African Customs Union, all impediments or barriers to trade are lifted,
such that these countries can freely trade both goods without any costs. Furthermore, assume
that ap = 0.8 and ac = 0.2.
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