Consider an economy that only produces steel and
Shoes; steel is capital intensive and shoes are labor
Intensive.How will emigration of labor from this
Economy affect production?

Question

Quizplus · Accepted Answer

Emigration of labor will reduce the availability of labor in the economy, which will increase the cost of labor. This will make the production of labor-intensive goods, such as shoes, more expensive and less profitable compared to the production of capital-intensive goods, such as steel. As a result, the economy will shift its production towards the capital-intensive good, and the production of the labor-intensive good will fall while the production of the capital-intensive good will rise.

Consider an Economy That Only Produces Steel and