Specific Factors Model.Nom. Wage (P*MPL)Suppose that here are two goods,Bicycles (Industry "B") andGrapefruit (“G").Bicycles use labor and capital toproduce, while Grapefruit uselabor and land.P*MPL(B)P'MPL(G)This country exports bicycles andthere is an increase in the worldrelative price. Show what happensto labor in the bicycle industry.Labor in Grapefruit>ELabor in BicyclesWhat happens to labor in eachgood, and to the country's nominalwage and real wage?

In an economy, when two goods are produced using the same input resource, that is, labor, capital,…

Specific Eactors Moxdel. Nom. Wage (P'MPL) Suppose that here are two goods, Bieyeles (Industry "B") and Grapefruit ("G"). Bicycles use labor and capital to produce, while Grapefruit use labor and land. P'MPLIB) PMPLIG) This country exports bicyclos and there is an increase in the world relative price. Show what happens to labor in the bieycle industry. Labor in Grapetrut Labor in Bicycles What happens to labor in each good, and to the country's nominal wage and real wage?

Specific Eactors Moxdel. Nom. Wage (P'MPL) Suppose that here are two goods, Bieyeles (Industry "B") and Grapefruit ("G"). Bicycles use labor and capital to produce, while Grapefruit use labor and land. P'MPLIB) PMPLIG) This country exports bicyclos and there is an increase in the world relative price. Show what happens to labor in the bieycle industry. Labor in Grapetrut Labor in Bicycles What happens to labor in each good, and to the country's nominal wage and real wage?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter19: Labor And Entrepreneurship: The Human Inputs

Section: Chapter Questions

Problem 3DQ

See similar textbooks

Similar questions

xercise 5: Production and income distributionConsider and economy with the following production technology: ,Y = 9K1/3L2/3 wherethe aggregate capital stock is K=100, and aggregate labor is L=100. The price of output is1.a) Write down the maximization problem of the firm.b) Compute the equilibrium wage and capital return.c) Compute total payments to labor and capital. Show Euler’s Theorem holds, i.e. showthat total payments to capital and labor equal the value of output.d) What share of output goes to labor and capital?e) Suppose there is an increase in L, what would be impact on wages and capital returns?Explain.
Home has 1200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in bananas production it is 2. There is now also another country, Foreign, with a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in bananas production it is 1. a) When all the labor in Foreign country only produce apples, how many units of apples can be produce? b) When all the labor in Foreign country only produce bananas, how many units of bananas can be produce? c) What is the opportunity cost of apples in terms of bananas in Foreign country?
Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150. If w=2w* , what goods should Home produce? What should Foreign produce?
Consider the market for dry vegetables. Suppose that there is increased taste for a healthy diet. What is the intial effect of this shock in the market for dry vegetables?
Suppose that the economy in the Jatinagor area has a Production Possible Limit with the equation X² + 4Y² = 64. Calculate what the value of X is if Y = 0 and what is the value of Y if X = 0 What is the opportunty cost of X if Y is constant in the economy or does it depend on the levels of output produced? Explain!
Solve Input demand and input supply Item1 : Good Q , L labor ,W wage ,A level of technology Q=A0K^alpha L^beta Q=80-P A0=1 K =36 unit L =40+0.5w alpha =0.5 beta =0.5 1. From the condition and price of the labor market equilibrium quantity in item 1, assuming that the price of good Q increases by 10% of the price of P0 Show the change in the price of the labor factor. and the amount of labor factor to be traded in the labor market And along with calculating the income size of both buyers and sellers, labor factors that should be relied on 2.Summarize the theoretical principles of the properties of demand. in factors of production and the factors affecting the change in the price of production factors are obtained when the price of production changes, the quantity of capital k changes, and the level of technology. as well as the supply characteristics of the changing factors
Consider two countries, Home and Foreign and two goods appples and bananas. In the Home country the unit labour requiremrents for apples and bananas are repectively 3 and 2. In the Foreign country the unit labour requirements for apples and bananas are 5 and 1 respectively. The Home country has a labour force of 1200 and the Foreign country has a labour force of 800. Graph the Production Possiblity Frontiers for each of the two countries. What are the prices of apples in terms of bananas in both countries in the absence of trade? Why? Construct the world relative supply function. Suppose that the world relative demand takes the following form: demand for ap- ples/demand for bananas = banana price/apple price. Draw the world relative de- mand curve superimposed on the world relative supply curve. What is the equilibrium relative price of apples under free trade? Describe the pattern of trade. Show that each of the two countries gain from trade. Suppose that instead of 1200…
Consider the specific-factors model with 2 goods: manufacturing and agriculture. Manufacturing requires labour and sector-specific capital, while agriculture requires labour and sector-specific land. Labour is freely mobile across sectors. The government is considering to impose an import tariff on agricultural products. Which of the following is true? (a)The relative price of agricultural products will go down. (b)Capitalists will support this initiative. (c)Agricultural production will increase. (d)Marginal product of labour will decrease in manufacturing. Explain your answer clearly. Limit your explanation to 200 words.
There are two countries in the world economy: Home and Foreign. Home has 3000 units of labor available. It can produce two goods, coffee (C) and sugar (S). The unit labor requirement in coffee production at home, aLc, is 4, while the unit labor requirement in sugar production, aLs, is 10. Foreign has a labor force of 1600. Foreign’s unit requirement in coffee production, a*Lc, is 10, while the unit labor requirement in sugar production, a*Ls, is 2. Graph the production possibility frontier for both Home and Foreign. Use C in the vertical axis. What is the opportunity cost of coffee in terms of sugar in both Home and Foreign? Using the information (numbers) provided above, construct the world relative supply curve. Label it RS. The horizontal axis must show the world quantity of coffee relative to the world quantity of sugar, i.e., (Qc+Q*c)/(Qs+Q*s). The vertical axis must show the relative price of coffee with respect to the price of…
Use the information given here to answer the following questions:Manufacturing:Sales revenue = PM • QM = 150 Payments to labor = W • LM = 100 Payments to capital = RK • K = 50Agriculture:Sales revenue = PA • QA = 150 Payments to labor = W • LA = 50 Payments to land = RT • T = 100Holding the price of manufacturing constant, suppose the increase in the price of agriculture is 10% and the increase in the wage is 5%.a. Determine the impact of the increase in the price of agriculture on the rental on land and the rental on capital. Explain what has happened to the real rental on land and the real rental on capita If instead of the situation given in Problem 5, the price of manufacturing were to fall by 10%, would landowners or capital owners be better off? Explain. How would the decrease in the price of manufacturing affect labor? Explain.
Suppose two countries are considering a new agricultural trade agreement with each other. CountryA has abundant low-skill labor and scarce land.Country B has abundant arable land but little population. In which country do land owners supporta trade agreement? In which country do workerssupport a trade agreement?
Suppose there are two countries for analyses, the United States and Indonesia. Assume that 2000 man hours are available in the United States and 36000 in Indonesia. The following table provides information on how many man-hours are needed to produce one unit of the same goods. Indonesia United States Cloth 50 3 Machines 100 5 2.2 What is the autarky price of machines in Indonesia and United States?