Unformatted text preview: the stock
of land an economy has. For example, suppose a natural disaster decreases the quantity of
arable land used for planting crops.
a. (10 points) Use a diagram to show this change impacts the labor allocation between
manufacturing and agriculture.
b. (5 points) What is the effect of this change in land on the quantity of labor in each
industry and on the equilibrium wage? Explain.
c. (10 points) What is the effect on the rental rate for land and capital? Explain.
Prof. Anca Cristea EC 481/581 Winter 2013 PART B: True/ False For each question, answer T/F and briefly explain the answer (...
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This document was uploaded on 01/18/2014.
- Spring '14