Question 3 There are a total of 1,400 workers in the economy, and workers can either seek employment in one of two sectors: the Agricultural Sector or the Manufacturing Sector. The graph below depicts the marginal revenue product curves for both sectors in the economy before the introduction of international trade. Wage $22 $20 $22 MRP $20 Wage $18 $16 $14 $12 $10 $18 $16 $14 $12 $10 MRP 200 400 600 800 1,000 1,200 1,400 Part (i): Suppose that the marginal product of the 300th worker in the Agricultural Sector is 24 units of output. That is, hiring the 300th worker in the Agricultural Sector increases the quantity of output by 24 units in that sector. What is the price of output sold in the Agricultural Sector? Part (ii): Suppose that the marginal product of the 500th worker in the Manufacturing Sector is 0.04 units of output. That is, hiring the 500th worker in the Manufacturing Sector increases the quantity of output by 0.04 units in that sector. What is the price of output sold in the Manufacturing Sector? Part (iii): Identify the allocation of the 1,400 workers such that there is no incentive for additional migration between the two sectors. Part (iv): Suppose that the country begins to export the product sold by the Agricultural Sector, and as a result, 200 workers migrate from the Manufacturing Sector to the Agricultural Sector. By how much did exporting increase the marginal revenue product of each worker in the Agricultural Sector? Part (v): Suppose that the country begins to export the product sold by the Agricultural Sector, and as a result, 200 workers migrate from the Manufacturing Sector to the Agricultural Sector. By how much does the equilibrium wage rise in each sector? Part (vi): Exporting leads the marginal revenue product of labor curve in the Agricultural Sector to shift upward. What is the source of this upward shift?
Question 3 There are a total of 1,400 workers in the economy, and workers can either seek employment in one of two sectors: the Agricultural Sector or the Manufacturing Sector. The graph below depicts the marginal revenue product curves for both sectors in the economy before the introduction of international trade. Wage $22 $20 $22 MRP $20 Wage $18 $16 $14 $12 $10 $18 $16 $14 $12 $10 MRP 200 400 600 800 1,000 1,200 1,400 Part (i): Suppose that the marginal product of the 300th worker in the Agricultural Sector is 24 units of output. That is, hiring the 300th worker in the Agricultural Sector increases the quantity of output by 24 units in that sector. What is the price of output sold in the Agricultural Sector? Part (ii): Suppose that the marginal product of the 500th worker in the Manufacturing Sector is 0.04 units of output. That is, hiring the 500th worker in the Manufacturing Sector increases the quantity of output by 0.04 units in that sector. What is the price of output sold in the Manufacturing Sector? Part (iii): Identify the allocation of the 1,400 workers such that there is no incentive for additional migration between the two sectors. Part (iv): Suppose that the country begins to export the product sold by the Agricultural Sector, and as a result, 200 workers migrate from the Manufacturing Sector to the Agricultural Sector. By how much did exporting increase the marginal revenue product of each worker in the Agricultural Sector? Part (v): Suppose that the country begins to export the product sold by the Agricultural Sector, and as a result, 200 workers migrate from the Manufacturing Sector to the Agricultural Sector. By how much does the equilibrium wage rise in each sector? Part (vi): Exporting leads the marginal revenue product of labor curve in the Agricultural Sector to shift upward. What is the source of this upward shift?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Question 3
There are a total of 1,400 workers in the economy, and workers can either seek employment in one of
two sectors: the Agricultural Sector or the Manufacturing Sector. The graph below depicts the marginal
revenue product curves for both sectors in the economy before the introduction of international trade.
Wage
$22
$20
$18
$16
$14
$12
$10
$22
MRP
$20
$18
$16
$14
$12
$10
MRP
200
400 600
800 1,000 1,200 1,400
Избе
Part (i): Suppose that the marginal product of the 300th worker in the Agricultural Sector is 24 units of
output. That is, hiring the 300th worker in the Agricultural Sector increases the quantity of output by 24
units in that sector. What is the price of output sold in the Agricultural Sector?
Part (ii): Suppose that the marginal product of the 500th worker in the Manufacturing Sector is 0.04 units
of output. That is, hiring the 500th worker in the Manufacturing Sector increases the quantity of output
by 0.04 units in that sector. What is the price of output sold in the Manufacturing Sector?
Part (iii): Identify the allocation of the 1,400 workers such that there is no incentive for additional
migration between the two sectors.
Part (iv): Suppose that the country begins to export the product sold by the Agricultural Sector, and as a
result, 200 workers migrate from the Manufacturing Sector to the Agricultural Sector. By how much did
exporting increase the marginal revenue product of each worker in the Agricultural Sector?
Part (v): Suppose that the country begins to export the product sold by the Agricultural Sector, and as a
result, 200 workers migrate from the Manufacturing Sector to the Agricultural Sector. By how much
does the equilibrium wage rise in each sector?
Part (vi): Exporting leads the marginal revenue product of labor curve in the Agricultural Sector to shift
upward. What is the source of this upward shift?
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