Assume that capital is mobile, but labor is specific. That is, assume that labor is not...

Assume that capital is mobile, but labor is specific. That is, assume that labor is not mobile between industries, but capital is mobile between industries. Assume that in autarky, all firms are in equilibrium where w/r = MPL/MPK, and that wages are the same in both industries. In the relatively capital-abundant country, what happens when trade begins to the following variables? I. The real income of wage earners in the labor-intensive industry. J. The real income of wage earners in the capital-intensive industry. K. The real income of owners of capital in the capital-intensive industry. L. The real income of owners of capital in the labor-intensive industry.

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Rahul Sunny answered 1 year ago

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