"A good cannot be both land- and labor-intensive." Discuss
What will be an ideal response?
In a two good, two factor model, such as the original Heckscher-Ohlin framework, the factor intensities are relative intensities. Hence, the relevant statistic is either workers per acre (or acres per worker); or wage per rental unit (or rental per wage). In order to illustrate the logic of the statement above, let us assume that the production of a broom requires 4 workers and 1 acre. Also, let us assume that the production of one bushel of wheat requires 40 workers and 80 acres. In this case the acres per person required to produce a broom is one quarter, whereas to produce a bushel of wheat requires 2 acres per person. The wheat is therefore (relatively) land intensive, and the broom is (relatively) labor intensive.
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Suppose an ocean liner sinks and the passengers are stranded on a lush tropical island. Which of the following could most likely be used as money in the economy that develops among the survivors?
a. The life jackets they put on when leaving the ship b. The beads from the necklaces that were given out as party favors on the night the ship sank c. The coconuts growing on the island d. The fish in the sea around the island e. The sand on the island's beaches
For a firm, the relationship between the quantity of inputs and quantity of output is called the
a. profit function. b. production function. c. total-cost function. d. quantity function.