ch. 4 Specific factor model Flashcards
(11 cards)
What are the assumptions of the model?
What are the pruduction function characteristics?
Why is the production possibility frontier not a straight line?
How can we represent the labour market equilibrium?
What does the labor market equilibrium implies? how can we represent it in the ppf?
What happens to relative prices when there s trade? How can we prepresent it?
How does a change in relative price influence the labour market equilibrium?
What happens to the ppf if relative prices change?
What happens to real income when relative prices change?
What is the difference between inflation and change in relative price in the labour market equilibrium?
What is the intution behind the decreasing marginal productivity of a single factor? what is behind increasing marginal productivity in the other factor?
