Suppose Country A produces two goods, Good X and Good Y. Production of Good X involves an intensive use of skilled workers. Good Y is a relatively capital-intensive good. If the country experiences a wave of immigration of skilled workers, capital remaining unchanged, the Rybczynski theorem predicts that:

Question

Gillian Irwin

Business

15 June, 15:37

Suppose Country A produces two goods, Good X and Good Y. Production of Good X involves an intensive use of skilled workers. Good Y is a relatively capital-intensive good. If the country experiences a wave of immigration of skilled workers, capital remaining unchanged, the Rybczynski theorem predicts that:

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Answers (1)

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Madyson Brooks · Answer 1

The production of good Y will reduce.

Explanation:

The Rybczynski Theorem (RT) says that if the endowment of some resource increases, the industry that uses that resource most intensively will increase its output while the opposite industry will decrease its output.

In view of this question, the production of commodity or goods X requires intensive use of skilled workers. Hence, the production of goods X will increase as a result of immigration of skilled workers in the country while that of goods Y will reduce.

The theorem also suggests that unbalanced growth in factor supplies tends, at constant commodity prices, to steer to strong asymmetric changes in output level of two sorts of industries-capital-intensive and labour-intensive.

If the member of things and commodities are evenly matched and two commodities (such as X and Y) aren't jointly produced, this asymmetry entails that growth in one factor, like labour, acts as a force to cause an actual fall within the production of the other commodity.