Problem
Consider the foregoing problem in a long run context, when the fraction of the labour force that is high-skilled is more elastic with respect to the premium. Let this long-run relative supply function be W = 100×0.4× f.
(a) Verify that this long run function goes through the same equilibrium as in the preceding question.
(b) Illustrate the long run and short run on the same diagram.
(c) What is the numerical value of the premium in the long run after the increase in demand? Illustrate graphically.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.