Business, 26.05.2021 14:00 suiani8

Suppose an economy has two industries producing corn (c) and tractor (t). The production functions for the two industries are. Yc = min (Lc/2, Kc/1) and Yt = min (Lt/2.5, Kt/3),

where Li and Ki are the amount of labor and capital used in industry i (i = c, t). Constraints for labor and capital endowments are given as follows:

Lc + Lt ≤ 63 and Kc + Kt ≤ 42.

Derive the production transformation curve and show the output vector (Yc, Yt) that corresponds to full employment of both factors? (10 marks)

What range of output price ratio (Pc/Pt) is consistent with the full employment of both factors simultaneously? (10 marks)

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Suppose an economy has two industries producing corn (c) and tractor (t). The production functions f...

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