Economists argue that temporary factor-price differentials tend to be eroded by factor mobility. Consider the two
markets for sheet-iron workers and steel-pipe workers in the same region. Suppose both markets are competitive. We begin in a situation in which both sheet-iron workers and steel-pipe workers earn $20 per hour. Assume that workers can switch easily between the two jobs. Draw 2 separate diagrams showing the supply and demand for labour in each of the two markets - sheet-iron market and steep-pipe market.
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