a) What are the Marshall’s Rules of Derived Demand for labor?
b) The North American Free Trade Agreement (NAFTA) – which came into force on January 1, 1994 – created a trilateral trade bloc between the United States, Canada and Mexico. One result of the agreement was the elimination of U.S. tariffs on textile imports from Mexico. How would the elasticity of demand for labor in the U.S. textile industry been affected by this? Explain using relevant Marshall’s Rules.
c) The U.S. Environmental Protection Agency (EPA) announced that greenhouse gases (GHGs) threaten the public health and welfare of the American people, as they are the primary driver of climate change. As a result, the EPA plans to set limits on allowable carbon dioxide (CO2) emissions and require the installation of pollution abatement technology (i.e., machine) in plants emitting CO2. Since fossil fuel industries (oil and coal) are among the biggest sources of CO2 emissions, how might these new regulations affect the elasticity of the labor demand in these industries? Explain using relevant Marshall’s Rules.