are tal (C) factors of production for supply of land, the Marginal Productivity of labour is the same as in the table for the vodka sector. Assume that initially the price of vodka (Pv), is equal to the price of olives (Po). Argue that employment is equalized across industries. What is the effect of a fall in the relative price of vodka (Pv/Po) on the allocation of labour and on output? Are there both winners and losers from such a price change? Explain. (d) Suppose that the world relative price of vodka (Pv/Po)w is lower than the relative price in Poland (Pv/Po). What will Poland decide to export and to import? Who definitely gains and loses from trade?

are tal (C) factors of production for supply of land, the Marginal Productivity of labour is the same as in the table for the vodka sector. Assume that initially the price of vodka (Pv), is equal to the price of olives (Po). Argue that employment is equalized across industries. What is the effect of a fall in the relative price of vodka (Pv/Po) on the allocation of labour and on output? Are there both winners and losers from such a price change? Explain. (d) Suppose that the world relative price of vodka (Pv/Po)w is lower than the relative price in Poland (Pv/Po). What will Poland decide to export and to import? Who definitely gains and loses from trade?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter19: Labor And Entrepreneurship: The Human Inputs

Section: Chapter Questions

Problem 2DQ

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