Homework 2

# Homework 2 - Homework 2 Name Purdue ID Part 1. Questions...

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Homework 2 Name Purdue ID

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Part 1. Questions that you do not need to turn in. Answer the following questions. You do not need to turn them in. Study Guide, Chapter 3, problems 2, 3, 4, 7b, 7c.
Part 2 I. Suppose that land is specific to corn, capital is specific to automobiles, labor is mobile between sectors, and payments are as follows: Automobiles: sales revenue = 200; payments to labor = 100; payments to capital = 100 Corn: sales revenue = 100; payments to labor = 40; payments to land = 60. Suppose the price of corn rises by 20%, the price of automobiles does not change, and wage increases by 10%. Assume that the quantities (including outputs for automobiles and corn and labor employments in corn and automobiles) do not change. Answer the following questions. 2 points each, 10 points total. (1). (2 points) What happens to the (nominal) income of land? (2). (2 points) what happens to the (nominal) income of capital?

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## This note was uploaded on 11/03/2009 for the course MGMT 411 taught by Professor Clarke during the Spring '09 term at Purdue.

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Homework 2 - Homework 2 Name Purdue ID Part 1. Questions...

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