Consider a hypothetical economy in which only
Computers and shoes are produced and in which
Computer production is capital intensive as compared
With shoe production.If two resources are being used,
Labor and capital, then the capitallabor ratio would be:
A)higher in the shoe industry.
B)lower in the computer industry.
C)the same in both industries.
D)higher in the computer industry.

Question

Consider a hypothetical economy in which only
Computers and shoes are produced and in which
Computer production is capital intensive as compared
With shoe production.If two resources are being used,
Labor and capital, then the capital­labor ratio would be:
A)higher in the shoe industry.
B)lower in the computer industry.
C)the same in both industries.
D)higher in the computer industry.

Quizplus · Accepted Answer

Since computer production is capital intensive as compared with shoe production, it means that the computer industry uses more capital relative to labor as compared to the shoe industry. This implies that the capital-labor ratio will be higher in the computer industry. Therefore, the answer is D.

Consider a Hypothetical Economy in Which Only