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l. (30 points) Consider an economy consisting of two industries and two factors of production. The two industries are cars (labeled as 1) and electronics
l. (30 points) Consider an economy consisting of two industries and two factors of production. The two industries are cars (labeled as 1) and electronics (labeled as 2), and the two factors of production are labor (labeled as L) and capital (labeled as K). The allocation of labor and capital across the industries are as follows: Labor Capital Cars (industry 1) L1 = 400 K1 = 1200 Electronics (industry 2) L2 = 600 K2 = 600 The whole economy L = 1000 K = 1800 Suppose the relative price of cars to electronics remains the same. Under this condition, it is given that changes in factor endowments K and L are related to changes in outputs of industries according to the following equations: AK 301 AQz Tr \"K1 1 + 5K2 Qz AL AQI A02 T a\" E + a\" E . . . . K Here, aK1,a:K2,aL1,crL2 are the share of capltal and labor in industries 1 and 2: am = i, and, an, at\
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