MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
10th Edition
ISBN: 9781319467203
Author: Mankiw
Publisher: MAC HIGHER
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Question
Chapter 7, Problem 7PA
(a)
To determine
Relationship between wage rates in two sectors.
(b)
To determine
Wage rate and employment.
(c)
To determine
Employment in the manufacturing sector.
(d)
To determine
New wage rate and employment in service sector.
(e)
To determine
An economy’s
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full answer to question c and e
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Assume that Home and Foreign produce two goods, TVs and cars, and use the information below to answer the following questions:
Home Country Foreign Country
Wage tv = 12. MPLtv =2 Wage*tv = ? MPL*tv =? P*tv = 3
Ptv = ? Wage c = ? Wage*c = 6 MPL*c =1 P*c = ?
MPLc =? Pc=4
What is the marginal product of labor for TVs and cars in the Home country? What is the no-trade relative price of TVs at Home?
What is the marginal product of labor for TVs and cars in the Foreign country? What is the no-trade relative price of TVs in Foreign?
Suppose the world relative price of TVs in the trade equilibrium is PTV /PC = 1. Which good will each country export? Briefly explain why.
Chapter 7 Solutions
MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
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