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04-07-2024
Business

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Suppose that two goods are produced: pianos and couches. Pianos use .5 units of capital per worker, so that KP /LP=. 5 whereas couches use 3 units of capital for each worker, so that KC/LC=3.
There are 200 workers and 200 units of capital in the economy. There if full employment and all factors are mobile across sectors.
a. Which industry is capital intensive and which is labor intensive?

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