Consider a specific-factors model where two Countries, Denmark and Tanzania, use labor to produce cake (C) and helicopters (H). However, arable land (A) are a factor specific to cake, and jerrycans (J) are a factor specific to helicopters. Suppose that Tanzania has L 100 workers, J = 40 jerrycans, and A = 1000 arable land. The production functions and marginal products of labor for cake and helicopters are: C = 4 x L0.5 xA0.5 MPLC = 2 x Lc-0.5 x A0.5 H = 4 x LH0.5 x J0.5 °x J0.5 MPLH = 2 x LH-0.5 x j0.5 In Tanzania, the price of crystals is 20 and the price of hyperdrives is 200. In this case, the wage rate will be and the cake industry and will be employed in the helicopter industry. workers will be employed in workers
Consider a specific-factors model where two Countries, Denmark and Tanzania, use labor to produce cake (C) and helicopters (H). However, arable land (A) are a factor specific to cake, and jerrycans (J) are a factor specific to helicopters. Suppose that Tanzania has L 100 workers, J = 40 jerrycans, and A = 1000 arable land. The production functions and marginal products of labor for cake and helicopters are: C = 4 x L0.5 xA0.5 MPLC = 2 x Lc-0.5 x A0.5 H = 4 x LH0.5 x J0.5 °x J0.5 MPLH = 2 x LH-0.5 x j0.5 In Tanzania, the price of crystals is 20 and the price of hyperdrives is 200. In this case, the wage rate will be and the cake industry and will be employed in the helicopter industry. workers will be employed in workers
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.3P
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Transcribed Image Text:Consider a specific-factors model where two
Countries, Denmark and Tanzania, use labor
to produce cake (C) and helicopters (H).
However, arable land (A) are a factor specific
to cake, and jerrycans (J) are a factor specific
to helicopters. Suppose that Tanzania has L =
100 workers, J = 40 jerrycans, and A = 1000
arable land. The production functions and
marginal products of labor for cake and
helicopters are:
C = 4 x Lc
%D
0.5 x A0.5
MPLC = 2 x Lc0.5 x A0.5
H = 4 x LH0.5 x J0.5
MPLH = 2 x LH-0.5 x J0.5
In Tanzania, the price of crystals is 20 and the
price of hyperdrives is 200. In this case, the
wage rate will be ___
and
the cake industry and
will be employed in the helicopter industry.
%3D
workers will be employed in
workers
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