a. Which diagram shows the supply of ocean liners to the
world as whole? Explain its elasticity.
b. Which diagram shows the supply of ocean liners to
Canada? Explain its elasticity.
c. Which diagram shows the supply of ocean liners to an
individual Canadian firm? Explain its elasticity.
d. What is the general relationship between factor mobility
and the elasticity of factor supply?
9. In the text we argued that temporary factor-price differentials
tend to be eroded by factor mobility. This question requires you
to think about this process. Consider the two markets for sheet-
iron workers and steel-pipe workers in the same region. Suppose
both markets are competitive. We begin in a situation in which
both sheet-iron workers and steel-pipe workers earn $20 per
rishikesh
(rishikesh)
#1