Consider an increase in the supply of labor due to immigration, and use the long-run model. Class example shows the box diagram and the leftward shift of the origin for the shoe industry. Redraw this diagram, but instead, shift to the right the origin for computers. That is, expand the labor axis by the amount AL = ½ L, but shift it to the right rather than to the left. With the new diagram, show how the amount of labor and capital in shoes and computers is determined, without any change in factor prices. What has happened to the amount of labor and capital used in each industry and to the output of each industry? Oc K A

Consider an increase in the supply of labor due to immigration, and use the long-run model. Class example shows the box diagram and the leftward shift of the origin for the shoe industry. Redraw this diagram, but instead, shift to the right the origin for computers. That is, expand the labor axis by the amount AL = ½ L, but shift it to the right rather than to the left. With the new diagram, show how the amount of labor and capital in shoes and computers is determined, without any change in factor prices. What has happened to the amount of labor and capital used in each industry and to the output of each industry? Oc K A

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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