Exercise 19.33. Consider the economy in Section 19.7, but assume that the South is bigger than the
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Exercise 19.33. Consider the economy in Section 19.7, but assume that the South is bigger than the North. (1) Show that in this case not all Southern workers will work in sector 2 and there will be some learning-by-doing in the South. (2) How does this affect the long-run equilibrium? [Hint: show that the limiting value of L1 s is equal to 0].
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