Question
Suppose that there are drastic technological improvements in shoe production at Home such that shoe factories can operate almost completely with computer-aided machines. Consider the
Suppose that there are drastic technological improvements in shoe production at Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country: Computers: Sales revenue PCQC = 100 Payments to labour WLC = 50 Payments to capital RKC = 50 Percentage increase in the price PC / PC = 0% Shoes: Sales revenue PSQS = 100 Payments to labour WLS = 5 Payments to capital RKS = 95 Percentage increase in the price PS / PS = 50%
. Given the percentage changes in output prices above, calculate the percentage change in the rental on capital.
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