Canada produces airplanes, which require labor and capital to produce, and beef, which requires labor and land to produce. Canada exports planes. If the productivity of Canadian capital increases while the productivity of Canadian land decreases, Group of answer choicesworkers are better offoutput of beef industry decreasesthe labour to capital ratio in the plane industry decreasesworkers are worse off
Question
Canada produces airplanes, which require labor and capital to produce, and beef, which requires labor and land to produce. Canada exports planes. If the productivity of Canadian capital increases while the productivity of Canadian land decreases, Group of answer choicesworkers are better offoutput of beef industry decreasesthe labour to capital ratio in the plane industry decreasesworkers are worse off
Solution
The correct answer is: the labour to capital ratio in the plane industry decreases.
Step 1: Understanding the Situation Canada produces airplanes and beef. Airplanes require labor and capital to produce, while beef requires labor and land. The productivity of Canadian capital increases while the productivity of Canadian land decreases.
Step 2: Understanding the Impact When the productivity of capital increases, it means that each unit of capital can produce more output. This could lead to an increase in the production of airplanes, which are capital-intensive. Conversely, a decrease in the productivity of land could lead to a decrease in the production of beef, which is land-intensive.
Step 3: Identifying the Correct Answer Given that the productivity of capital has increased, the plane industry might require less labor to produce the same amount of output. This would lead to a decrease in the labor to capital ratio in the plane industry.
Similar Questions
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The production possibility frontier shows the maximum output a nation can produce with available resources.Group of answer choicesTrueFalse
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