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-Assume a small country has two sectors: capital-intensive manufacturing (M) and labour- intensive manufacturing (T), each using two factors, K and L, where (*/L)M>
-Assume a small country has two sectors: capital-intensive manufacturing (M) and labour- intensive manufacturing (T), each using two factors, K and L, where (*/L)M> (/L)T Explore the effects of immigration (an inflow of labour into the economy) as follows. (a) Illustrate using well-labeled diagrams and explain the short-run effects of immigration (i) on wages in the economy, assuming wages are equal in both sectors. [5 marks] (ii) on the distribution of production between the two sectors using a production pos- sibilities frontier (PPF) diagram. [5 marks] (b) Illustrate using well-labeled diagrams and explain the long-run effects of immigration (i) on the allocation of factors (K and L) between sectors using a box diagram of dimensions K and L showing the K/L ratios. [5 marks] (ii) on the distribution of production between the two sectors using a production pos- sibilities frontier (PPF) diagram. [5 marks] (c) Summarize and explain the differences of immigration's effects on wages in the short run and long run [5 marks]
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