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Consider a long-run model for a country producing two products (digital cameras and baskets) using two factors (capital and labor). Suppose the foreign owners of
Consider a long-run model for a country producing two products (digital cameras and baskets) using two factors (capital and labor). Suppose the foreign owners of domestic capital decide to decrease their investment. Does output in each industry increase, decrease, or stay the same? Do wages increase, decrease, or stay the same in each industry? Explain. (digital camera : capital-intensive, baskets : labor-intensive)
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