Exam 4: Specific Factors and Income Distribution

The slope of a country's production possibility frontier is equal to _ and the optimal production point is located where the slope is equal to .Assume that output of good Y is measured on the vertical axis,output of good X is measured on the horizontal axis,MPL is the marginal product of labor with a subscript indicating which good,P is the price of a good,and w is the wage rate.

A worker who has invested in skills will be mobile than would otherwise be the case.

Economists consider the effects of free trade on income distribution to be important than the effects on overall welfare because .

In modern economies,

A country's budget constraint states that

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to and it as more cloth is produced.

In the specific factors model,labor is defined as a(an)

In the specific factors model,a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause in the welfare of labor,in the welfare of the fixed factor in the production of food,and in the welfare of the fixed factor in the production of cloth.

In the specific factors model,a country's production possibility frontier is because of .