Question: 3. Consider a Specific Factors Model in which labour is the mobile factor, and land and capital are the specific factors. Then, as a result
3. Consider a Specific Factors Model in which labour is the mobile factor, and land and capital are the specific factors. Then, as a result of offshoring (e.g. domestic firms buy the services of labour abroad electronically at a fixed wage) the following changes in the incomes of (domestic) workers, landowners, and capitalists are possible in the domestic economy: (a) Workers gain 20, landowners gain 10, and capitalists gain 20. (b) Workers lose 10, landowners lose 10, and capitalists gain 30. (c ) Workers gain 20, landowners lose 10, and capitalists gain 20. (d) Workers lose 30, landowners gain 20, and capitalists gain 20. (e ) None of the above.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
