a) An item is produced using two input factors. It is constant scale yield in production. The product is sold in a market with free competition ranse. One input factor is labor, the other is land. Demand for the item suddenly increases. Who will benefit the most from this the change: business owners, workers or landowners? NB! Here the answer is not obvious. You need to figure out how the answer is depends on the scarcity of resources, the substitutability between lom the input factors, whether there is competition in the commodity market, and short versus long term.

a) An item is produced using two input factors. It is constant scale yield in production. The product is sold in a market with free competition ranse. One input factor is labor, the other is land. Demand for the item suddenly increases. Who will benefit the most from this the change: business owners, workers or landowners? NB! Here the answer is not obvious. You need to figure out how the answer is depends on the scarcity of resources, the substitutability between lom the input factors, whether there is competition in the commodity market, and short versus long term.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter3: Demand, Supply, And The Market Process

Section: Chapter Questions

Problem 10CQ

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