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Suppose Home produces two goods: Rice and Beans. by using only land and labour. Land supply is fixed in each industry. Workers are not allowed
Suppose Home produces two goods: Rice and Beans. by using only land and labour. Land supply is fixed in each industry. Workers are not allowed to change industries. The relative price of Beans, in terms of Rice, is 1. The marginal product of labour in each industry is identical and given by: Number of Workers Employed Marginal Product of Last ~Worker 20 19 18 17 16 15 14 13 12 11 . Dm-JCECIJLCJM . . u-v Originally, there are 9 workers employed in the Rice industry and 3 workers employed in the Beans industry. If the country then decides to allow free movement of labour across industries. determine the changes in: a) Wages in each industry In) Labour employed in each industry c) Total output cl) Incomes of workers who migrate between industries e) Incomes of workers who don't migrate (in each industry) f) Incomes of landowners in each industry
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