Question
Consider a Specific-Factors model. Two countries, Domestic and Foreign, A and B. Assume Domestic has LD 100 workers. Domestic's marginal product of labor in
Consider a Specific-Factors model. Two countries, Domestic and Foreign, A and B. Assume Domestic has LD 100 workers. Domestic's marginal product of labor in both industries are: = MPLD,A = 2/LD, A MPLD,B = 6/LD,B (4) Suppose that the price of cookies is 3 and the price of hot chocolate is 3. Calculate the change in Domestic's real wage in terms of A if immigration causes Lp to rise to 140 (e.g., if the pre-immigration real wage is 2.0 and the post-immigration real wage is 1.5, your answer will be 1.5 - 2.0 = = -0.5).
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International Trade
Authors: John McLaren
1st edition
0470408790, 978-0470408797
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