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There are two economies. Economy A is dominated by the selfdriving cars, which has the following production function: The production function of the selfdriving car

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There are two economies. Economy A is dominated by the selfdriving cars, which has the following production function: The production function of the selfdriving car industry is: Y = Ki (min{2H, 7L})% , where K represents capital, H represents highskilled labor, and L represents low skilled labor. Economy B is dominated by the agriculture industry, which has the following pro duction function: Y=K% (4H+3L), where as before K represents capital, H represents highskilled labor, and L repre sents lowskilled labor. Suppose an immigration policy in each economy increased the intake of lowskilled immigrants rapidly. In the short run, how would it affect the wage of highskilled workers in each economy? (10 marks)

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