Consider two countries, Germany and Poland. Both countries have two factors of production(Labor and Capital), produce the same homogeneous good and use the same technology. Theonly difference between them is that Germany is relatively more abundant in capital thanPoland.3.(a) Using a graph compare the wages in Germany and Poland, assuming there is absence offactor mobility.(b) Now allow for migration (i.e. labor mobility), but not for capital mobility. Who gains andwho loses in Germany? Illustrate your answer graphically.(c) Show that the "original" residents of Germany gain, i.e., the gains of those who gain inGermany more than compensates the loss of those who lose.

As we know, Germany is a capital abundant country and there is a shortage of labour so the price…

Answered: Consider two countries, Germany and…

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 1CQQ

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