Question: 1 Migration is expected to occur if movement between two markets is frictionless unless: A. Value of Marginal Product (VMPe) is equal in both markets B. Their populations are equal C. They have the same labor demand function D. Total gains from trade are equal across both markets

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Economics: Labor Economics

Question: 1

Migration is expected to occur if movement between two markets is frictionless unless:

A. Value of Marginal Product (VMPe) is equal in both markets

B. Their populations are equal

C. They have the same labor demand function

D. Total gains from trade are equal across both markets

 

Question: 2

The market wage increases by 8%. In response the firm reduces its employment by 5%.

What is the elasticity of labor demand?

Show your work.

Is the demand for labor elastic or inelastic?

What do you think will happen to this coefficient in the long run?

 

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