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Marginal Rate of Product Transformation and Productivity

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Suppose that Japanese and U.S automakers produce on identical isoquats and that wages are higher in Japan than in the United States. Do autoworkers in Japan have a higher marginal product than American autoworkers?

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If they produce on identical isoquants, that means that they need the same combinations of capital and labour to produce a given amount of ...

Solution Summary

A short description on productivity and resource allocation using the example of automakers in Japan and the US.