5. In Home and Foreign, there are two factors each of production, land, and labor used to...

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5. In Home and Foreign, there are two factors each of production, land, and labor used to produce only one good. The land supply in each country and the technology of production are exactly the same. The marginal product of labor in each country depends on employment as follows:

Number of Workers Employed Marginal Product of Last Worker 1 20 2 19 3 18 4 17 5 16 6 15 7 14 8 13 9 12 10 11 11 10 Initially, there are 11 workers employed in Home, but only 3 workers in Foreign.

Find the effect of free movement of labor from Home to Foreign on employment, production, real wages, and the income of landowners in each country.

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International Finance Theory And Policy

ISBN: 9781292019550

10th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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