Which of the following factors is likely to induce an increase in the difference between the...

Which of the following factors is likely to induce an increase in the difference between the wage rate and the rental rate of capital, i.e w-r?

		Increased immigration into the country.
		A war that decimates half of a country's capital.
		A decrease in the productivity of labor.
		A plague that kills half of a country's labor force.

Solutions

Expert Solution

Increased immigration into country will increase supply of labor and will bring wage rate down and hence w-r down

War decimatitng capital will increase rental rate of capital hence decreasing w-r

Decrease in labor productivity will bring w down and hence w-r

Plague decreasing labor force will cause shortage of labor increasing wage rate and hence w-r so, last statement increases w-r

Rahul Sunny answered 1 year ago

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