Suppose Jamacia trades in sugar and steel with other countries such as Canada, M

Question

Suppose Jamacia trades in sugar and steel with other countries such as Canada, Mexico, and the U.S. Use the following data for the sugar and steel sector of Jamaica.

Sugar: Sales Revenue: Ps*Qs=80

Payments to Labor: W*Ls=50

Payments to Capital: R*Ks

Percentae Increase in Price:?Ps/Ps=0%

Steel: Sales Revenue: Pb*Qb=80

Payments to Labor: W*Lb=30

Payments to Capital: R*Kb=50

Percentage increase in price:?Pb*/Pb= 25%

1Give the percentage change in the rental on capital and percentage change in wage.

Compare the magnitude of the percentage in the rental on capital with percentage change in wage in part 1. Use notation format.

Explanation / Answer

percentage change in capital=20% percentage change in labour =40% Also Steel is more favourable beacuse of the percentage increase in the price which will also cause more profit and capital.

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