In the short-run specific-factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops. a. Demonstrate a change in the supply of land on the accompanying diagram. b. New equilibrium wage:

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Movement of Labor and Capital Between Countries
In the short-run specific-factors model, consider a decrease in
the stock of land. For example, suppose a natural disaster
decreases the quantity of arable land used for planting crops.
a. Demonstrate a change in the supply of land on the
accompanying diagram.
b. New equilibrium wage:
c. New quantity of agricultural labor:
d. The rental on capital will
decrease
increase
remain the same
Wage
20
19
18
17
16
15
14
13
12
11
10
9
8
7
0
5
4
3
2
1
0
P MPL
A A
MPL
01234 678 10 11 12 13 14 15 16 17 18 19 20
Labor
Transcribed Image Text:Movement of Labor and Capital Between Countries In the short-run specific-factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops. a. Demonstrate a change in the supply of land on the accompanying diagram. b. New equilibrium wage: c. New quantity of agricultural labor: d. The rental on capital will decrease increase remain the same Wage 20 19 18 17 16 15 14 13 12 11 10 9 8 7 0 5 4 3 2 1 0 P MPL A A MPL 01234 678 10 11 12 13 14 15 16 17 18 19 20 Labor
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