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  Numerical Example

L  =  10

Total available LABOR is 10 man-hours.

K = 100 Total available  CAPITAL is 100 units.

b  =  .5

half an hour of LABOR is needed to BAKE one loaf of BREAD

c  1

one hour of LABOR is needed to WEAVE one yard of CLOTH

d  =  88 units of CAPITAL  is needed to BAKE one loaf of BREAD
66 units of CAPITAL  is needed to WEAVE one yard of CLOTH

Suppose we want 6 loaves of BREAD.

QB   =  6

How much CLOTH can we produce?

QC  =   ?

BAKING 6 loaves of BREAD takes
3
hours of LABOR.

LB  =   b QB =  (.5) 6 = 3

7 hours remain for WEAVING CLOTH

LC L - LB 10 - 3 = 7

BAKING 6 loaves of BREAD requires
48
units of CAPITAL.

KB  =   d QB =  (8) 6 = 48

52 units remain for WEAVING CLOTH. KC = K- KB 100- 48 = 52

Iin 7 hours we can WEAVE

at most 7 yards of CLOTH

QCL  =  LC / 7 / 1  = 7

With 52 units of CAPITAL we can WEAVE

 at most
8.66
yards of CLOTH

QCK = KC /= 52/6  = 8.66

Taking both LABOR and CAPITAL
in
consideration we cannot produce
more than
7 yards of CLOTH.
Q = min( QCL, QCK ) = 7
10 units of CAPITAL remains unutilized. (QCK - QCL)6  =  10

 

 

 

 

 

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