1 Pkte Frage 1 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: Labor Input to Good 1 Output of Good Labor input to Good 2 Output of Good 2 0 0 0 20 55 20 50 40 73 69 40 60 86 60 84 96 80 80 94 Is 100 100 100 100 The marginal product of labor curves corresponding to the production functions for goods 1 & 2 are as follows: Workers Employed in 1 MPL in Sector Workers Employed in 2 MPL in Sector 2 100 100 100 100 The marginal product of labor curves corresponding to the production functions for goods 1 & 2 are as follows: Workers Employed MPL in Sector Workers Employed MPL in Sector in 1 1 [in 2 2 20 1.5 1.4 20 40 1 40 60 0.75 0.75 60 80 0.5 0.6 80 100 0.4 100 0.5 Suppose the price of good 2 relative to that of good 1 is 0.75. The allocation of labor between the two sectors is such that there will be workers in sector 2 O 100 O 80 00 40 60 1