Question: Could anyone please answer this question? I will give you thumb up! Thank you! 2. An economy can produce manufacturing goods (M) using labor (L)

Could anyone please answer this question? I will give you thumb up! Thank you!

Could anyone please answer this question? I will give you thumb up!

2. An economy can produce manufacturing goods (M) using labor (L) and capital (K) and food (F) using labor (L) and land (T). The total supply of labor is 8. Given the supply of K and T, the outputs of the two goods depend on labor input as follows: a) Calculate the marginal productivity of labor in each sector. b) Suppose that the price of manufacturing relative to food is 5. 1. ii. iii. iv. V What is the allocation of labor between the two sectors? What is the output of each sector? What is the real return to labor? What is the real return to capital? What is the real return to land? c) Suppose now the country opens up to trade and the price of manufacturing relative to food falls to 0.2. i. ii. iii. iv. vi. vii. Is this country an exponer or an importer of manufacturing goods? What is the allocation of labor between the two sectors? What is the output of each sector? What is the real return to labor? Are workers better off aer trade? If you assume that food accounts for a bigger share of labor's consumption than manufacturing, how does this change your answer? What is the real return to capital? Are capital owners better off after trade? What is the real return to land? Are landowners better off aer trade? Are your answers consistent with the main predictions of the SFM

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