In this diagram, the economy's total endowments of labor and land are
measured on the horizontal axis and vertical axis, respectively. Cloth production (C) is measured from the bottom left corner (0C), and food production (F) is measured from the top right corner (0F).
The slope of each line is measured by each good's land-labor ratio (T/L).
Box Diagram with given endowments of land and labor
The point where the lines intersect represents the allocation of land and labor used to produce each good.
Diagram with increasing labor supply
This
diagram demonstrates the effects of an increase in labor on the
land-labor allocation for the production of food and cloth.
The increase in labor will increase both labor and land used in
production of cloth, and decrease both labor and land used in
production of food.
Move on to the model. Back to Factor Endowments and Intensities.
