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Could you explain how to solve this problem? The gure below shows Lorenz curves of a developing country before and after opening for international trade

Could you explain how to solve this problem?

The gure below shows Lorenz curves of a developing country before and after opening for international trade (the solid and dashed lines, respectively). Prior to international trade there are 70 workers who receive a total of 70 % of the economy's income. Of these 70 workers, 15 have 'high'-skills, while 55 workers are low-skilled; before trade these worker groups earn respectively 50 % and 20% of country's total income. There are 5 business owners who earn 30 % of the economy's income and 25 unemployed persons initially. 'High'-skilled workers use a certain technology that is not as advanced as the one used in the foreign developed country, while the low-skilled workers use primitive tools but are capable of producing products that are highly demanded in the foreign developed country. The total income of the economy increases by 10 % due to opening for international trade. Other changes happening after opening for trade are marked by dashed lines in the graph below.

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100 70 60 Cumulative share of world's output (%) 30 20 0- 0 15 25 80 95 100 -PL Unemployed Low-skilled 'Higher'-skilled Business owners Potential employees Cumulative share of the population from lowest to highest income (%) 1. What happened to unemployment after opening for trade? How much did it change? (1 point ) 2. After international trade, low-skilled workers, now each earn what percentage of the economy's income? (1 point) 3. Has the relative situation of the low-skilled workers improved ? Provide calculations to explain your answer. (2 points) 3 4. How much did each business owner's earnings change in relative terms? in absolute terms? (3 points ) 5. The share of income received by 'high -skilled workers changed by what percent age: in relative terms? in absolute terms? (3 points ) 6. Has inequality increased or decreased in the country after opening for trade? Give a short explanation to your answer. (2 points )

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