Find percentage change in real income of land owners

Reference no: EM132198046

Questions: A country is endowed with 15 units of capital, 20 acres of land and 100 laborers. Capital and land are specific to the manufacturing and food sectors, respectively. Let the price of food be fixed at 1, and suppose that, in autarky, the price of manufactures is 2, while in free trade, it is 3.5. The marginal product of labor is given by the following functions:

MPLm = 80-2Lm

MPLf = 140-Lf

What is the percentage change in the real income of capital owners in terms of each good, as the country moves from autarky to free trade?

What is the percentage change in the real income of land owners in terms of each good, as the country moves from autarky to free trade?

Reference no: EM132198046

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