3.1.2016 Slides - Resources and Output How do levels of...

This preview shows page 1 - 6 out of 6 pages.

Resources and Output How do levels of output change when the ec onomy’s resources change? Rybczynski theorem : If you hold output pri ces constant as the amount of a factor of prod uction increases, then the supply of the good that uses this factor intensively increases and the supply of the other good decreases .
Image of page 1

Subscribe to view the full document.

Rybczynski theorem
Image of page 2
Input Possibilities in Food Production
Image of page 3

Subscribe to view the full document.

The Production Possibility Frontier with Factor Substitution
Image of page 4
Image of page 5

Subscribe to view the full document.

Image of page 6

Unformatted text preview: Production Possibilities Where on the PPF does the country produce (a llowing factor substitution)? The economy produces at the point that maxim izes the value of production, V. An isovalue line is a line representing a consta nt value of production, V: V = P C Q C + P F Q F ◦ where P C and P F are the prices of cloth and food. ◦ Slope of isovalue line is – ( P C /P F ) Prices and Production...
View Full Document

  • Spring '16
  • Economics, Production-possibility frontier, Factor Substitution

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern