O T B Capital A 0 C Labour
O T B Capital A 0 C Labour
Why is the PPF bowed out? Example: Cobb-Douglas production functions Y C = K α L 1 � α and Y T = K β L 1 � β , ! where cars are more capital intensive ) α > β Productivity: C and y T = k β y C = k α T As we move from textiles to cars k C and k T decline in proportion = k α y C C k β y T T productivity of car production falls relative to that of textiles For every unit of textiles given up, the gain in terms of cars declines () March 31, 2008 1 / 1
Recommend
More recommend
