LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 4, Problem 2RQ
To determine
The implications of equilibrium for a competitive economy containing many regional markets.
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Consider the figure attached below which shows the combined production function of Anna and Bob. Assume a case where Anna works on the land owned by Bob. By referring to the diagram above, explain how does Anna ranks the possible allocations marked as X, Y, Z and A according to production functions and their curves and slopes ? Question is complete
Discuss whether the imposition of maximum prices can improve the allocation of scarce resources. Give reasons why and why not.
Discuss with help of a production possibility curve, how resource allocation decisions are made and how allocation decisions incur an opportunity cost.
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