The Edgeworth box on the right shows how castaways Tom and Hank are allocating labor and capital to the production of two goods, food and clothing.
The economy is currently at point A.

a. How many units of labor and capital are being used in the production of each good?
b. How many units of food are being produced? Clothing?
c. Suggest a simple reallocation of labor and capital between food and clothing that will enable Tom and Hank to enjoy more food and clothing than they currently produce.

Transcribed Image Text:

Labor inputs for clothing 8 7 6 5 43 2 1 2 0 Qs= 100 3- -4 c 40 0 1 2 3 4 5 6 7 8 2 Labor inputs for food