Suppose in a particular labor market, the demand for labor is given by the equation LD = 180 – 3W and that the labor supply in this market for native-born citizens is given by LN = 3W, while the supply curve of immigrants in this market is given by LI = 2W, where L represents the number of workers, W is the wage expressed in real terms. Finally, suppose the production function can be represented by ?=100√L a. Assuming immigration is entirely prohibited, what are the equilibrium wage and employment level in this market? b. What would be the equilibrium wage and employment level in this market if immigration were completed legalized? c. How many jobs do natives lose as a result of this immigration? How much aggregate income is lost?
Suppose in a particular labor market, the demand for labor is given by the equation LD = 180 – 3W and that the labor supply in this market for native-born citizens is given by LN = 3W, while the supply curve of immigrants in this market is given by LI = 2W, where L represents the number of workers, W is the wage expressed in real terms. Finally, suppose the production function can be represented by ?=100√L
a. Assuming immigration is entirely prohibited, what are the equilibrium wage and employment level in this market?
b. What would be the equilibrium wage and employment level in this market if immigration were completed legalized?
c. How many jobs do natives lose as a result of this immigration? How much aggregate income is lost?
d. Assuming the costs of capital in this market are zero, find the total profits to firms before and after immigration. What is the change in total profits?
e. Compute the total output of this market before and after immigration. How much total output does society gain because of immigration?
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