Use the following to answer questions 34-35:
Figure 15.8
-(Figure 15.8). Suppose the food industry is using 4 capital inputs and 4 labor inputs, while the clothing industry is using 1 capital input and 4 labor inputs. It would be a Pareto improvement if the _____ industry gave _____ capital input(s) to the _____ industry in exchange for _____ labor input(s).

Question

Use the following to answer questions 34-35:
Figure 15.8 
-(Figure 15.8). Suppose the food industry is using 4 capital inputs and 4 labor inputs, while the clothing industry is using 1 capital input and 4 labor inputs. It would be a Pareto improvement if the _____ industry gave _____ capital input(s) to the _____ industry in exchange for _____ labor input(s).

Quizplus · Accepted Answer

The food industry has more capital inputs than the clothing industry, while both have the same labor inputs. By transferring 1 capital input from food to clothing in exchange for 1 labor input, both industries can potentially improve their production efficiency, leading to a Pareto improvement.

Use the Following to Answer Questions 34-35