There are a total of 1,050 units of labor in the economy, an…
There are a total of 1,050 units of labor in the economy, and workers can either seek employment in the Agricultural Sector or the Manufacturing Sector. The graph below depicts the marginal revenue product curves for both sectors in the economy before the introduction of international trade. Part (i): Identify the equilibrium number of workers employed in each sector prior to opening up to international trade. Part (ii): Suppose that the country begins to export products produced in the Agricultural Sector. Identify that will happen (i.e., increase or decrease) to the employment in each sector. Part (iii): Suppose that the country begins to export products produced in the Agricultural Sector. Identify that will happen (i.e., increase or decrease) to wages in each sector.