Suppose That the Wage Is $20 Per Hour in a Two­sector

question 114

Essay

Suppose that the wage is $20 per hour in a two­sector
(manufacturing and agriculture) specific­factors model.
Currently, the prices of manufactured and agricultural
outputs are $5 and $1, respectively; the marginal
product of labor in the manufactured sector is 6 units
per hour; and the marginal product of labor in the
agricultural sector is 10 units per hour.What will
happen to the rentals on land and capital?

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Definitions:

Responsibility Accounting

A financial tracking system that gathers, compiles, and presents financial data relevant to the duties of specific managers.

Controllable Costs

Expenses that can be directly influenced or managed by a specific department or level of management.

Investment Center

A business segment whose manager has control and is accountable for generating revenue, incurring costs, and making significant investment decisions.

Indirect Fixed Costs

Costs associated with the operation of a business that are not directly tied to a specific product or service and do not vary with the level of production.