Question
Consider the numerical example as follows: AKC= Capital used to produce one yard of cloth = 2 ALC= Labor used to produced one yard of
Consider the numerical example as follows:
AKC= Capital used to produce one yard of cloth = 2
ALC= Labor used to produced one yard of cloth = 2
AKF= Capital used to produce one calorie of food = 3
ALF= Labor used to produce one calorie of food =1
K = Economy's fixed supply of capital = 3,000
L = Economy's fixed supply of labor = 2,000
What is the range for the relative price of cloth such that the economy produces both cloth and food? Which good is produced if the relative price is outside of this range?
I need a detailed answer please, thank you ;)
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