The Rybczynski theorem asserts that in a two-good model, assuming that product prices stay constant, growth in the endowment of one factor of production with the other factor remaining unchanged, will result in- An increase in the output of the good that uses the growing factor intensively and a decrease in the output of the other good.
Explanation:
- Rybczynski theorem states that there exist a positive/direct relationship between changes in a factor endowment and changes in the output of the product that uses that factor intensively.
- The theorem also states that there is a negative/indirect relationship between changes in a factor endowment and changes in the output of the product that does not use that factor
