An economy can produce good 1 using labor and capital and good 2 using labor and land.

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An economy can produce good 1 using labor and capital and good 2 using labor and land. The total supply of labor is 100 units. Given the supply of capital, the outputs of the two goods depend on labor input as follows:

a. Graph the production functions for good 1 and good 2.
b. Graph the production possibility frontier. Why is itcurved?

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International Economics Theory and Policy

ISBN: 978-0273754206

9th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Question Posted: Oct 24, 2012 11:37 PM

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An economy can produce good 1 using labor and capital and good 2 using labor and land.

Question:

Labor Input to Good 1 Output of Good 1 0.0 25.1 38.1 48.6 57.7 66.0 73.6 80.7 874 93.9 Labor Input to Good 2 Output of Good 2 0.0 39.8 52.5 61.8 69.3 75.8 81.5 86.7 91.4 95.9 100 10 30 30 50 60 70 80 100 100

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a b 120 100 80 60 40 ...View the full answer

International Economics Theory and Policy

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