Consider an increase in the supply of labour due to immigration, and use the long-run model. Figure 5-8 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 labour axis by the amount \Delta L but shift it to the right rather than to the left. With the new diagram, show how the amount of labour and capital in shoes and computers in determined, without any change in factor prices. Carefully explain what has happened to the amount of labour and capital used in each industry and to the output of each industry. Decrease in labor in the computer industry Increase in Home labor due to immigration; all additional labor (AL) allocoted to shoes Increase in copital in the shoe industry. Draw a diagram: 3. Increase in capital in the shoe industry 1. Increase in Home labor due to immigration; all additional labor (AL) allocated to shoes 4. Decrease in labor in the computer industry 2. Decrease in capital in the computer industry 5. Additional increase in labor in the shoe industry

Consider an increase in the supply of labour due to immigration, and use the long-run model. Figure 5-8 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 labour axis by the amount \Delta L but shift it to the right rather than to the left. With the new diagram, show how the amount of labour and capital in shoes and computers in determined, without any change in factor prices. Carefully explain what has happened to the amount of labour and capital used in each industry and to the output of each industry. Decrease in labor in the computer industry Increase in Home labor due to immigration; all additional labor (AL) allocoted to shoes Increase in copital in the shoe industry. Draw a diagram: 3. Increase in capital in the shoe industry 1. Increase in Home labor due to immigration; all additional labor (AL) allocated to shoes 4. Decrease in labor in the computer industry 2. Decrease in capital in the computer industry 5. Additional increase in labor in the shoe industry

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 13P

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