May anybody help me with this questions, thanks! . Match the graphs in Figure 8.
ID: 1217630 • Letter: M
Question
May anybody help me with this questions, thanks!
. Match the graphs in Figure 8.2 with the changes described below. Assume that good X is the capital intensive, good Y is labor intensive good, and there are constant returns to scale.
a) A 10% increase in supply of capital.
b) A 10% increase in the supply of labor.
c) A 10% increase in both the supply of capital and labor.
d) Technical progress in the production of Good X, but not Good Y.
e) Technical progress at the same rate in the production of both Goods X and Y.
Figure 8.2 0) 0i) Ci) i) (iv)Explanation / Answer
a) A 10% increase in supply of capital. Graph ii (increase in supply of capital will more increase the production of capital-intensive good and will increase the productivity of labor as well so the little increase in the production of labor-intensive good as well.
b) A 10% increase in the supply of labor. Graph iv. increase in the supply of labor will increase the production of labor-intensive good.
c) A 10% increase in both the supply of capital and labor. Graph1. Increase in the production of both X nad Y.
d) Technical progress in the production of Good X, but not Good Y. Graph 3. Increase in the production of good X only.
e) Technical progress at the same rate in the production of both Goods X and Y. Graph 1. PPF will shift as change in technology for both the goods.