Question: In the short-run specific-factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land

In the short-run specific-factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops.

a. Redraw panel (a) of Figure 5-11 starting from the initial equilibrium at point A.

(a) Effect on Labor Allocation and Wage (b) Effect on Industry Outputs Wage, W Output of Relative price PA . MPLA agriculture, QA of manufactured goods, PM/PA B Home PPF W' W PM . MPL'M B P. . MPLM Shift in A Home PPF OM OA due to FDI LM- LA Output of Total labor in the economy, I manufacturing, QM

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