ermany is the European Union’s largest economy. Suppose that it produces two goods: electricity and food. Electricity (e) is produced with large capital investments (C), especially in green energy, while food (f) is labour intensive (L). This means ae > af.   You are given the following graph (graph attached as image to question) determined from the final prices of food and electricity and the optimal capital-labour ratios in the two sectors. From this graph below, explain which sectors production is the largest and

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Germany is the European Union’s largest economy. Suppose that it produces two goods: electricity and food. Electricity (e) is produced with large capital investments (C), especially in green energy, while food (f) is labour intensive (L). This means ae > af.

 

You are given the following graph (graph attached as image to question) determined from the final prices of food and electricity and the optimal capital-labour ratios in the two sectors. From this graph below, explain which sectors production is the largest and why.

Capital
Oe
P'
Of
Labor
Transcribed Image Text:Capital Oe P' Of Labor
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Two goods are produced in the economy :  Electricity & Food 

Electricity is capital intensive & Food is labor intensive .


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