(1)In competitive markets, the compensation/income of a factor is its marginal product. Consider the following information:

AldariaBorduria

K117632

L9365,056

1/31/3

A4.53.0

(a)If only K were free to flow, in which direction would it flow? Explain.

(b)If only L were free to flow, in which direction would it flow? Explain.

(c)Explain the two results above.

(d)If a benevolent global central planner were to allocate the total amounts of K and L between the two economies with the objective of maximizing world output, how would the planner allocate them? Explain.

(e) If A were free to flow like K and L, how would the long-run equilibrium compare to (a) and (b)?