Agriculture and capital is specific to manufacturing

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Reference no: EM131005106

Examine the impact on a small country following an outward flow of immigrants that decreases its labor force. Assume that land is specific to agriculture and capital is specific to manufacturing, while labor is free to move between the two sectors. Assume that there is no international trade, and that the prices of the manufactured and agricultural goods do not change.

Determine whether each statement is true or false, then briefly explain why.

(1) The workers who do not immigrate are better off.

(2) The output of the agricultural good increases.

(3) The marginal product of labor increases for the manufacturing industry.

(4) The marginal product of capital increases for the manufacturing industry.

(5) The capital owners become worse off.

(6) The land owners become better off.

Reference no: EM131005106

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