rm2 160A W2015.pdf Long Questions I. Factor Flows (Labor and Capital) A. Specifi
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rm2 160A W2015.pdf Long Questions I. Factor Flows (Labor and Capital) A. Specific Factors (Short-run) [15 points: 3 points per question] Suppose Malaysia has two industries: computers and textiles. Firms have made specific investments industries while labor is free to move between the two sectors. If new workers move to Malaysia, how will the in both following be affected? For each answer, note if the item will increase, decrease or remain unchanged. Worker Real Wages in Malaysia The return to capital owners in Malaysia's computer industry The return to capital owners in Malaysia's textile industry affect? Suppose instead that Japan places FDI in Malaysia's computer industry. How will this FDI . Worker Real Wages in Malaysia · The return to capital owners in Malaysia's textile industry B. Migration with differential skills [25 points: 7/8/8] Ise the information nrovided in the diagram to answer the questions about the US Labor market.Explanation / Answer
Suppose new workers move tod Malaysia then the effects on the following will be....
1. Wokers Real Wages in Malaysia
If new wokers move to Malaysia the worker real wages will be deeply affected as it will come woen. Real wages are the wages that the workers get on the basis of which it is decided that what is the spending capacity of the individual and it will have more effect on the inflation and dertermining the standard of living in a country. Here, if more workers are added then the workers in the industires will increase as a result of which the wages in the industry will go down as the supply of workers will go up therefore decreasing the demand chain.
2. The return to capital owners in MAlaysia's computer industry
There are many firms who have invested specific amounts in the computer industry and if new workers move into Malaysia, defenitely some of the new workers will be added into the computer industry as well and therefore, return of the capital owners will increase. This will happen because the supply of the workers will increase and the work allocated will be less. Wages have to be paid among more workers and as there are more workers the output will be more. So the capital inflow increases as lower wages are to be paid and more output is generated.
3. The return to capital owners in Malaysia's textile industry
AS new workers move to Malaysia, workers in the textile industry will also increase. Therefore, like the computer industry , here to the return to capital owners will go up as more workers so more output and more workers so less wages. so the output is more in terms of wages and therfore the turnove increases and thus the return on capital increases too.
Suppose instead that Japan places FDI in Malaysia's computer industry. It will affect
1. Worker Real Wages in Malaysia
If Japan places Foreign Direct Investment (FDI) in Malayasia them the Worker Real Wages will also increase. Japan will come up with its investment and ideas in Malaysia. The capital increases in Malaysia, the workers will get more wages .
2. The return to capital owners in Malaysia's textile industry
If Japan uses the FDI in the textile industries of MAlaysia then the return to capital owners will defintely increase as there will be additional capital inflow and the industry can make use of the same for more production and output. But, on the other hand if Japan does not use the FDI in the textile industries of Malaysia them the return to capital owners will remain unchanged as there is no effect on it.
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