Use a graph of labor input and its marginal product to argue that in the specific factors model(i.e. in the short run), an inflow of labor to a country reduces wages in the country. How are the rental rates of specific factors affected? see figure 5-2 in the slides. The rental rates of specific factors rise, because their marginal products rise due to an increase in labor intensity.

Use a graph of labor input and its marginal product to argue that in the specific factors model(i.e. in the short run), an inflow of labor to a country reduces wages in the country. How are the rental rates of specific factors affected? see figure 5-2 in the slides. The rental rates of specific factors rise, because their marginal products rise due to an increase in labor intensity.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.3P

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