Suppose That an Economy Has 1,500 Units of Capital

Essay

Suppose that an economy has 1,500 units of capital
and 1,000 workers.This economy produces computers
and shoes.Computer production requires 4 units of
capital per worker and shirt production requires 1 unit
of capital per worker.
A) Solve for the amount of labor and capital used in
each industry.
If you answered Question 6 at the end of textbook
Chapter 5, you know that:
(1) KC + KS = the total capital stock, and LC + LS =
the total labor force; and
(2) K = 4 × LC, and KS = 1 × LS.
B) Suppose that the number of workers increases to
1,250 due to immigration, keeping total capital fixed
at 1,000.Solve for the distribution of labor and capital
between the two sectors.