In Home and Foreign there are two factors of production, land and labor, used to

Question

In Home and Foreign there are two factors of production, land and labor, used to produce only one good. The land supply in each country and the technology of production are exactly the same. The marginal product of labor in each country depends on employment as shown in the table to the right. Number of Workers Employed Marginal Product of Last Worker 20 19 18 17 16 15 14 13 12 4 Initially, there are 11 workers employed in Home, but only 3 workers in Foreign. Find the effect of free movement of labor from Home to Foreign on employment, production, real wages, and the income of landowners in each country 10 In equilibrium, there will be workers in Home and workers in Foreign. 10

Explanation / Answer

At the equilibrium, the movement of workers from home to foreign will stop. Currently 11 are working in home and 3 in foreign, so 11th worker will move as it has a higher MPL in foreign. 10th worker will also migrate for the same reason and then 9th and then 8th. At 7 workers at Home, there are 7 workers in foreign too and the MPL is same at 14.

At equilibrium there are 7 workers at home and 7 in foreign

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.