What is the condition for efficiency in production

Assignment Help Business Economics

Reference no: EM131392263

Consider a country in autarky with only two inputs, capital (K) and labor (L), that produces only two goods X and Y.

a. What is the condition for efficiency in production (allocation of inputs)?

b. Explain and show why competitive markets (i.e., all firms face the same price for capital and labor) generate (that is, result in) efficiency in production (i.e., lie on the contract curve; why do they give the condition you described in part a?).

c. What are the two other conditions necessary for this economy to be efficient?

Reference no: EM131392263

Questions Cloud

Find the half-life of the radionuclide : The activity R of a sample of an unknown radionuclide is measured at hourly intervals. The results, in MBq, are 80.5, 36.2, 16.3, 7.3, and 3.3. Find the half-life of the radionuclide

Derive the equilibrium outputs : There are two firms (firm A and firm B). Both have zero costs. They SIMULTANEOUSLY choose quantities: Q_A and Q_B. The inverse demand is P = 18 – Q, where Q = Q_A + Q_B. Derive the equilibrium outputs. No points for solving for the Stackleberg/sequen..

Derive the monopolists marginal cost and average cost : A monopolist has costs C(Q) = 5Q. It has one consumer whose inverse demand is P = 35-Q. Derive the monopolist’s marginal cost and average cost. Graph the demand and marginal cost curve.

Derive the average a buyer is willing to pay for a used car : There is a used car market with equal number of good and bad cars. There are two buyers and two sellers. The buyers are willing to pay $12,000 for a good car and $8000 for a bad car. However, the buyers do not know which seller has the good car. Deri..

What is the condition for efficiency in production : Consider a country in autarky with only two inputs, capital (K) and labor (L), that produces only two goods X and Y. What is the condition for efficiency in production (allocation of inputs) What are the two other conditions necessary for this econom..

What is percentage change in price of bond sam and bond dave : If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave? (Negative amounts should be indicated by a minus sign.

Understanding of effective leadership : Someone who is developing an understanding of effective leadership has many different styles and skills from which to choose. Discuss the importance of understanding these approaches to leadership during the process of leadership development.

What are the appropriate fiscal and monetary policies : Suppose the economy is experiencing serious inflation. What are the appropriate fiscal and monetary policies to correct this problem? Draw the Ms/Md graphs and show and tell how fiscal policy works to correct the problem.

The hospital buys a new mri machine for cash : The hospital buys a new MRI machine for cash. The accounting equation would be altered in the following manner:

User Account

All Pages