Question 2 A NEED HELP PLEASE 1.we developed a PPF for an economy that produced two goods with no factor substitution. This PPF givessome intuition for why the PPF in the the Heckscher-Ohlin Model is curved.a. Imagine an economy makes only clothes (Qc) and food (QF) and has two inputs of production: Labor (L) andCapital (K). It takes 4 units of capital and 1 unit of labor to make one unit of clothing. It takes 1 unit of capital and1 unit of labor to make one unit of food. There is no substitutability between the two inputs. Which industry islabor intensive and which is capital intensive? Show how you know.b. Draw the PPF for this country if it has 4,000 units of capital and 2,000 units of labor. Be sure to separatelyidentify the labor constraint, the capital constraint and the country's actual PPF.c. Identify on which segment of the PFF the following is true:i. The country is using all of its L, with some K leftover.ii. The country is using all of its K, with some L leftover.iii. The county is using all of its K and L.d. If we weaken the assumption of no substitutability, the PPF will go from being "kinked" to being curved.Explain why it is curved and why this is different from the reason the PPF was curved in the Specific-FactorsModel.2. Using the same information from the previous problem, answer the following questions.total cost of production, TC, is equal to the wL+rK. You can think of L and K in this context as the number of units oftheLabor or Capital that it takes to make one unit of the good.a. Write down the unit cost of production for one unit of clothing and one unit of food as a function of the wage(w) and rental rate (R). In a competitive market, those costs will be equal to the prices of clothing (Pc) and food(PF), so write equations that set the price of the good equal to the cost of producing it.

Given the information:Production Technology:For one unit of clothing, it takes 4 units of capital…

the 2. Using the same information from the previous problem, answer the following questions. total cost of production, TC, is equal to the wL+rk. You can think of L and K in this context as the number of units of Labor or Capital that it takes to make one unit of the good. a. Write down the unit cost of production for one unit of clothing and one unit of food as a function of the wage (w) and rental rate (R). In a competitive market, those costs will be equal to the prices of clothing (Pc) and food (PF), so write equations that set the price of the good equal to the cost of producing it.

the 2. Using the same information from the previous problem, answer the following questions. total cost of production, TC, is equal to the wL+rk. You can think of L and K in this context as the number of units of Labor or Capital that it takes to make one unit of the good. a. Write down the unit cost of production for one unit of clothing and one unit of food as a function of the wage (w) and rental rate (R). In a competitive market, those costs will be equal to the prices of clothing (Pc) and food (PF), so write equations that set the price of the good equal to the cost of producing it.

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

Question 2 A NEED HELP PLEASE

1.
we developed a PPF for an economy that produced two goods with no factor substitution. This PPF gives
some intuition for why the PPF in the the Heckscher-Ohlin Model is curved.
a. Imagine an economy makes only clothes (Qc) and food (QF) and has two inputs of production: Labor (L) and
Capital (K). It takes 4 units of capital and 1 unit of labor to make one unit of clothing. It takes 1 unit of capital and
1 unit of labor to make one unit of food. There is no substitutability between the two inputs. Which industry is
labor intensive and which is capital intensive? Show how you know.
b. Draw the PPF for this country if it has 4,000 units of capital and 2,000 units of labor. Be sure to separately
identify the labor constraint, the capital constraint and the country's actual PPF.
c. Identify on which segment of the PFF the following is true:
i. The country is using all of its L, with some K leftover.
ii. The country is using all of its K, with some L leftover.
iii. The county is using all of its K and L.
d. If we weaken the assumption of no substitutability, the PPF will go from being "kinked" to being curved.
Explain why it is curved and why this is different from the reason the PPF was curved in the Specific-Factors
Model.
2. Using the same information from the previous problem, answer the following questions.
total cost of production, TC, is equal to the wL+rK. You can think of L and K in this context as the number of units of
the
Labor or Capital that it takes to make one unit of the good.
a. Write down the unit cost of production for one unit of clothing and one unit of food as a function of the wage
(w) and rental rate (R). In a competitive market, those costs will be equal to the prices of clothing (Pc) and food
(PF), so write equations that set the price of the good equal to the cost of producing it.

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