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Assume that Mexico receives an inflow of FDI. Suppose two factors (labor and capital) are used...

Assume that Mexico receives an inflow of FDI. Suppose two factors (labor and capital) are used in the production in two industries (food and televisions). Further assume that televisions are capital intensive as compared with food. Use the long run specific-factors model to answer the following questions.

a. Explain the impact of the inflow of FDI on Mexico using the PPF. What happens to the output of each good using the Rybczynski

b. How has wage changed in terms of food and televisions?

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