In the two-sector specific-factors model, as more labor is added to a sector, we will see:...
In the two-sector specific-factors model, as more labor is added
to a sector, we will see:
|
the total product of labor decrease. |
|
|
the marginal product of labor increase. |
|
|
the average product of labor remains constant. |
|
|
the marginal product of labor decrease. |
Homework Answers
Ans) the correct option is the marginal product of labor decrease
as more labor is added to a sector, the marginal product of labor decreases due to law of diminishing returns
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In the two-sector specific-factors model, as more labor is added
to a sector, we will see:...
Using the Specific-Factors Model Suppose that the marginal product of labor in sector X is described...
Using the Specific-Factors Model Suppose that the marginal product of labor in sector X is described by MP LX = 2000−2LX and the marginal product of labor in sector Y is described by MP LY = 1000 − LY . The price of X and the price of Y in autarky are both $1. The total supply of labor is 1000. Given this information: 3. What is the equilibrium labor allocation to industry X? 4. What is the equilibrium labor...
In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of the manufactured...
In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of the manufactured good will cause: A) a decrease in nominal wages in both the agricultural and manufacturing sectors. B) an increase in real wages in both the agricultural and manufacturing sectors. C) an increase in both nominal and real wages in both the agricultural and manufacturing sectors. D) an increase in nominal wages in both the agricultural and manufacturing sectors. Which statement below is correct? A)...
Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative...
Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in It will rise. It will first fall, then rise. It will fall. It will not change.
In specific factors model the slope of the PPF or the opportunity cost of producing less of one good and more of the ot...
In specific factors model the slope of the PPF or the opportunity cost of producing less of one good and more of the other good is calculated by: O taking the difference of the marginal products of labor for the two goods. O taking the ratio of the marginal products of labor for the two goods. O taking the average of the marginal products of labor for the two goods. O taking the sum of the marginal products of labor...
Specific Factor Model 3. Specific factor model a. Why is the specific-factors model referred to as...
Specific Factor Model
3. Specific factor model a. Why is the specific-factors model referred to as a short run model? b. An economy can produce good 1 using labour and captal and good 2 using labour and land. The total supply of labour is 100 units. Given the supply of capital, the output of the two goods depend on labour input as follows: Labor Input to GoodI Labor Input to Good 2 Output of Good 2 0.0 39.8 52.5 61.8...
The specific factors model 1) Consider a family of farmers. Grandma owns the machinery necessary to...
The specific factors model
1) Consider a family of farmers. Grandma owns the machinery
necessary to produce corn, while Grandpa owns the machinery
necessary to produce soybeans. Their children carry out the work
required to produce both corn and soybeans. Assume that production
functions for the two goods are concave in labor.
(a) Starting with the profit maximizing condition w = P × M P L,
derive the diagram we have introduced in class. In the diagram,
show the areas...
Part II. The Specific-Factors Model 1. Assume under the Specific-Factors Model, home country export manufacturing goods...
Part II. The Specific-Factors Model 1. Assume under the Specific-Factors Model, home country export manufacturing goods to foreign country. Use the following information to answer the questions below: Manufacturing: Sales revenue Pm x Qm = 150 Payments to labor = W x Lm = 100 Payments to capital = Rkx K = 50 Sales revenue Pax Qa 150 Payments to labor W x La 50 Agriculture: Rt x T 100 Payments to land Holding the price of agriculture constant, suppose...
1 (Specific Factor Model, Chapter 3) In the simple" version of the specific factor model, there...
1. (Specific Factor Model, Chapter 3) In the "simple" version of the specific factor model, there are two sectors (goods), one factor (labor) that is perfectly mobile between the two sectors, and one fixed - or specific - factor in each sector. To be concrete, suppose the two goods are food and clothing, the specific factor in food is "land" - represented by "T", and the specific factor in clothing is "capital", represented by "K'. The production functions for each...
As additional units of a variable input are added to one or more fixed inputs, the...
As additional units of a variable input are added to one or more fixed inputs, the marginal product of the variable input will: initially increase then decrease. initially increase and continue to increase. remain constant as long as production exhibits constant returns to scale. initially decrease and continue to decrease. initially decrease then increase.
Consider an economy that uses two factors of production, capital (K) and labor (L), to produce...
Consider an economy that uses two factors of production, capital (K) and labor (L), to produce two goods, good X and good Y. In the good X sector, the production function is X = 4KX0.5 + 6LX0.5, so that in this sector the marginal productivity of capital is MPKX = 2KX-0.5 and the marginal productivity of labor is MPLX = 3LX-0.5. In the good Y sector, the production function is Y = 2KY0.5 + 4LY0.5, so that in this sector...
In specific factors model the slope of the PPF or the opportunity cost of producing less of one good and more of the other good is calculated by: O taking the difference of the marginal products of labor for the two goods. O taking the ratio of the marginal products of labor for the two goods. O taking the average of the marginal products of labor for the two goods. O taking the sum of the marginal products of labor...
Specific Factor Model
3. Specific factor model a. Why is the specific-factors model referred to as a short run model? b. An economy can produce good 1 using labour and captal and good 2 using labour and land. The total supply of labour is 100 units. Given the supply of capital, the output of the two goods depend on labour input as follows: Labor Input to GoodI Labor Input to Good 2 Output of Good 2 0.0 39.8 52.5 61.8...
The specific factors model
1) Consider a family of farmers. Grandma owns the machinery
necessary to produce corn, while Grandpa owns the machinery
necessary to produce soybeans. Their children carry out the work
required to produce both corn and soybeans. Assume that production
functions for the two goods are concave in labor.
(a) Starting with the profit maximizing condition w = P × M P L,
derive the diagram we have introduced in class. In the diagram,
show the areas...
Part II. The Specific-Factors Model 1. Assume under the Specific-Factors Model, home country export manufacturing goods to foreign country. Use the following information to answer the questions below: Manufacturing: Sales revenue Pm x Qm = 150 Payments to labor = W x Lm = 100 Payments to capital = Rkx K = 50 Sales revenue Pax Qa 150 Payments to labor W x La 50 Agriculture: Rt x T 100 Payments to land Holding the price of agriculture constant, suppose...
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