Consider two competitive economies that have the same quantities of labor and capital (K=L), and the same technology. The economies of the countries are described by the following Cobb–Douglas production functions: North Economy: Y = AK^0.7 L^0.3 South Economy: Y = AK^0.3 L^0.7 If half of workers (L) in North immigrated to South, explain how would total output, marginal produc- tivity of labor, and labor’s share of income in the two economies change?

Consider two competitive economies that have the same quantities of labor and capital (K=L), and the same technology. The economies of the countries are described by the following Cobb–Douglas production functions: North Economy: Y = AK^0.7 L^0.3 South Economy: Y = AK^0.3 L^0.7 If half of workers (L) in North immigrated to South, explain how would total output, marginal produc- tivity of labor, and labor’s share of income in the two economies change?

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter16: Economies In Transition

Section: Chapter Questions

Problem 8SQP

See similar textbooks

Similar questions

Consider two competitive economies that have the same quantities of labor (L = 400) and capital (K = 400), and the same technology (A = 100). The economies of the countries are described by the following Cobb–Douglas production functions: North Economy: Y = A L.3K.7 South Economy: Y = A L.7K.3 In which economy is labor's share of income larger? Explain
Consider two competitive economies that have the same quantities of labor (L = 400) and capital (K = 400), and the same technology (A = 100). The economies of the countries are described by the following Cobb–Douglas production functions: North Economy: Y = A L.3K.7 South Economy: Y = A L.7K.3 Which economy has the larger total production? Explain.
Let suppose in the world there is two country, Country X and Country Y. In country X there is only one worker A while on country Y the worker is B. And both can produce sugar and wheat. But the country B is specialized in producing wheat and the other one in sugar. Suppose that the A and the B each work 40 hours a week and can devote this time to growing sugar, raising wheat, or a combination of the both. The person A can produce a pound of sugar in 10 hours and a pound of wheat in 20 hours. The B, who is more productive in both activities, can produce a pound of Sugar in 8 hours and a pound of meat in 1 hour. (a) Draw the Production Possibilities Frontiers for both workers? (b) Whose have absolute and comparative advantage? (c) Why they move toward trade? (d) Graphically shows the gain from trade.
Using a production possibilities frontier determine how does a country's PPF change in response to the events described below . Make sure to explicit what sort of assumption each event implies (neutral effect or sector biased effect).and what sectors you are representing . The latter follows from your assumptions on the factor intensity of the sector you are representing. 1. Reducing import taxes on primary inputs. 2. The discovery of new mineral deposits in a country.
The table below shows the number of labor minutes it takes for each employee to produce one pizza and one salad. Compare all 3 employees to one another and determine which one of the following statements is true? Select one: a. Carter has a comparative advantage in making Salad b. Carter has an absolute advantage in both products c. Melanie has a comparative advantage in making Pizza d. Jackson has a comparative advantage in making Salad e. Melanie has a comparative advantage in making Salad f. Jackson has an absolute advantage in both products g. Carter has a comparative advantage in making Pizza
Using a production possibilities frontier determine how does a country's PPF change in response to the events described below. Make sure to explicit what sectors are you representing and what sort of assumption each event implies (neutral effect vs a sector biased effect). The latter follows from your assumptions on the factor intensity of the sector you are representing. 1.reducing import taxes (tariffs)on primary inputs 2.increasing the expenditure on research and development 3.the introduction of greater flexibility in labour markets(new government laws enabling easier hiring of workers) 4.increasing skilled migration into a country 5.the discovery of new mineral deposits in a country.
Germany is the European Union’s largest economy. Suppose that it produces two goods: electricity and food. Electricity (e) is produced with large capital investments (C), especially in green energy, while food (f) is labour intensive (L). This means ae > af. You are given the following graph (graph attached as image to question) determined from the final prices of food and electricity and the optimal capital-labour ratios in the two sectors. From this graph below, explain which sectors production is the largest and why.
The logic of service outsourcing - The Ricardian model It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to Pakistan, defies the logic of the Ricardian model. Let’s examine if this is actually the case. The following table presents information on labor productivity in computer component production and call center services in Canada and Pakistan. Assume that Canada has an absolute advantage in both. To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to Pakistan, and indicate the good in which each country has a comparative advantage. Production per Employee Production per Employee Computer Components Call Center Services Country (Units per hour) (Phone calls per hour) Comparative Advantage Canada 18 9 _____ (Call Center Services / Computer Components Production)…
Q3. Suppose that country A produces two goods (a labor-intensive good X, furniture, and a capital-intensive good Y, autos) and is considering forming a free trade agreement with one of its trading partners. The future free trade agreement is opposed by labor unions in country A. Could you infer which type of country (namely, capital- or labor-abundant) country A and its trading partner are, respectively? What would happen to the two countries’ w/r ratios (the ratios of wage rate relative to capital rental rate) after the formation of the free trade agreement? Your answer:
Consider two competitive economies that have the same quantities of labor (L = 400) and capital (K = 400), and the same technology (A = 100). The economies of the countries are described by the following Cobb–Douglas production functions: North Economy: Y = A L.3K.7 South Economy: Y = A L.7K.3 In which economy is the real wage larger? Explain.
Q82 One region has an absolute advantage over another region in the production of good X when... a. The first region has a larger supply of the raw materials required to produce good X. b. An equal quantity of resources can produce more of good X in the first region than in the second region. c. The opportunity cost of one unit of X is lower in the first region than in the second region. d. The first region has a more productive labour force than the second. e. There is no demand for good X in the second region
Suppose there exist two imaginary countries, Congaree and Yosemite. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor.