question 25

Consider the agricultural sector in the 1930s in the United States. There are two factors of production: labor and capital. There are two regions, Oklahoma and California, each with their own respective factor markets. Both factors can move costlessly between the two. Suppose that entrepreneurs introduce technological changes in Oklahoma that raise the marginal product of capital and lower the marginal product of labor. All else equal, employment in California will and wages in California will O rise; fall O fall; rise O rise; rise fall; fall O remain unchanged; remain unchangedSuppose worker discontent rises. The quantity of union services will and the price of union dues will O fall; fall O rise; fall O rise; rise O fall; rise