There are two factors of production (capital and land), two goods (cars and wheat), and two countries (Krugland and Helpland). Both factors are used in the production of each good, but car production is relatively capital intensive and wheat production is relatively land intensive. Krugland is relatively capital abundant and Helpland is relatively land abundant.
Assume Krugland is a small country. Suppose the capital stock of Krugland miraculously doubles but its land endowment doesn’t change.
a. Will Krugland’s output of cars increase or decrease? Briefly explain.
b. Will Krugland’s output of wheat increase or decrease? Briefly explain.
Solved
Show answers
More tips
- G Goods and services Stock center - a modern way of optimizing logistics...
- F Food and Cooking How to Properly Wash a Down Jacket? Tips from Experts...
- C Computers and Internet Thin Client: What It Is and Why You Need It?...
- F Food and Cooking The Most Delicious and Simple Fish in Batter Recipe...
- F Food and Cooking Red Caviar: How to Choose the Best?...
- C Computers and Internet Clearing Cache: How to Speed Up Your Browser...
- S Style and Beauty How are artificial nails removed?...
- S Style and Beauty Secrets of Tying a Pareo: 5 Ways...
- F Food and Cooking Everything You Need to Know About Pasta...
Answers on questions: Business
- B Business For each scenario, identify which argument is being used to justify trade protectionism. Politicians in a small nation want to impose tariffs on foreign food because...
- M Mathematics Saffron is a powder made from crocus flowers and is used in the manufacturing of perfume. some 8,000 crocus flowers are required to make 2 ounces of saffron. how many...
Ответ: