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equilibrium values

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Supose that Px=aLX * w + aKX * r= 60 *w +40*r, and that Py=aLY* w + aKY * r=75*w +25 *r

if px=py=100 what are the equilibrium values for wage and rental rate

If Py rose to 120 and the input coefficents didn't change what would be the new equilibrium values of w and r?

Please show your work because I'm having problems with the math.

Also I'm unsure what r and w stand for.

After the change would workers wage buy more or less good x? more or less of good y? capital-owners rent buy more or less good x? more or less good y? Have real wages risen or fallen? The rental rate?

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Solution Summary

The solution finds new equilibrium values of w and r.

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