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Assume that a country is endowed with equal amounts of K and T. Prices are P X = Py = $2 and the country's total
- Assume that a country is endowed with equal amounts of K and T. Prices are PX = Py = $2 and the country's total labor force is L =300= Lx + Ly. Labor is fully mobile between the two sectors. K is specific to the X sector and T is specific to the Y sector. Total endowment of K is 180 and total endowment of T is 180. Marginal products are given as: MPLX= K/Lx and MPLY= T/Ly. MPKX= Lx/Kand MPTY= Ly /T.
- How is labor distributed between the X and Y sectors in equilibrium? Suppose: PX increases by 200% and Py by 100%.
- What is the new labor distribution?
- Has output of X and Y changed?
- What happens to
- The real wage of workers
- The real return to capital
- The real return to landowners
- Perform the same analysis again (solve b-d again), but for a situation where PX increases by 50% and Py remains stable. How is your answer different?
- How is labor distributed between the X and Y sectors in equilibrium? Suppose: PX increases by 200% and Py by 100%.
- What is the new labor distribution?
- Has output of X and Y changed?
- What happens to
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Climate Policy And Nonrenewable Resources The Green Paradox And Beyond
Authors: Karen Vollebergh, Rick Van Der Ploeg
1st Edition
0262319845, 9780262319843
