ECONOMICS

PLEASE EXPLAIN

wwv- -----vv 13'4\"} Avva-\"wa-J v7 \\.r- 1. Consider a one-sector model with labor and capital. The marginal product of labor is given by M PL 2 200 L, where L is the labor input. The economy is endowed with 120 units of labor and 100 units of capital. Prices are exible. (a) Determine the output, wage rate, and rental rate under autarky. (b) Suppose that 20 units of labor move out to another country permanently. Determine the output, wage rate, rental rate, and the welfare of those left behind. (c) What is the welfare of TLB before the outow of these workers? What is the change in the welfare of TLB? (d) Assume that the emigrants earn a wage rate of 100 in the destination country. Suppose that these emigrants have to pay to the source country half of the gap between what they earn in the destination country and the wage rate in the source country before the emigration. How much total compensation will be generated? Will that be enough to cover the loss of TLB