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Unformatted text preview: c- If we invest some of our resources for tomorrow then than our investors frontier grows. The red line represents the amount of food you have to eat today, unless you starve. Going back up from that point is much harder because you can forgo for investment smaller amounts. question 4 For producing 10 goods we need 1 machine+10 workers. The marginal alternative cost for producing machine is: 900+0/180+0= 5 units of consumption goods. If we oblige to the ministry of labor there would be 900 goods created, and only 100 people unemployed in the market. Investing in goods creates a higher standard of living today but leaves no room of investing in the machinery that later on would create more employment. By allocation some of the resources into machinery production we create 140 people unemployed today. But we are investing in a product that would benefit us later....
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This note was uploaded on 10/25/2009 for the course BUSINESS 772 taught by Professor Sadeh during the Spring '07 term at Interdisciplinary Center Herzliya.
- Spring '07