Brazil produces aeroplanes, which require labor and capital to produce, and beef, which requires labor and land to produce. Brazil exports beef. If the world price of beef decreases then Group of answer choices Brazil will completely specialize in beef production Land to labor ratio in beef industry will increase Capital to labor ratio in aeroplanes industry will not change Capital to labor ratio in aeroplanes industry will increase
Question
Brazil produces aeroplanes, which require labor and capital to produce, and beef, which requires labor and land to produce. Brazil exports beef.
If the world price of beef decreases then
Group of answer choices
Brazil will completely specialize in beef production
Land to labor ratio in beef industry will increase
Capital to labor ratio in aeroplanes industry will not change
Capital to labor ratio in aeroplanes industry will increase
Solution
If the world price of beef decreases, it means that beef becomes less profitable for Brazil to export. This could lead to several potential outcomes:
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Brazil will completely specialize in beef production: This is unlikely. If the price of beef decreases, it becomes less profitable. Therefore, Brazil would likely shift resources away from beef production rather than specializing in it.
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Land to labor ratio in beef industry will increase: This could potentially happen. If beef becomes less profitable, producers might reduce the amount of labor they use in the beef industry (since labor is a cost). This would increase the land to labor ratio.
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Capital to labor ratio in aeroplanes industry will not change: This is not necessarily true. If resources are shifted away from the beef industry due to its decreased profitability, they might be moved to other industries, such as the aeroplane industry. This could potentially increase the capital to labor ratio in the aeroplane industry.
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Capital to labor ratio in aeroplanes industry will increase: As mentioned above, this could potentially happen if resources are shifted from the less profitable beef industry to the aeroplane industry.
In conclusion, without more specific information, it's hard to say exactly what will happen. However, it's unlikely that Brazil would specialize in beef production if the price of beef decreases. The ratios in the beef and aeroplane industries could potentially change depending on how resources are reallocated.
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