Question

How does growth affect production according to the Rybcznski Theorem?

Answer 1

Rybcznski Theorem demonstrates the effect of economic growth on the trade of a country. The theorem displays how change in an endowment affects the outputs of the goods while maintaining the full employment. It tells effect that at constant prices, an increase in one factor endowment will raise by a higher proportion the output of the good intensive in that factor and will decline the output of the other good. A rise in the supply of capital expands them disproportionately in the direction of the production of capital- intensive good, while rise in the supply of labour expands production possibilities disproportionately in the direction of the production of labour-intensive good,