The figure below represents the U.S. labor market. Assume that labor and capital

Question

The figure below represents the U.S. labor market. Assume that labor and capital are the only factors of production. Also assume the initial supply schedule of labor is denoted by S0 (= 2) and consists entirely of native U.S. workers. The horizontal axis is in millions. The demand schedule of labor is denoted by D0

with intercepts at 15 and 6.

At labor market equilibrium given by S0  (= 2) and D0, the payment to U.S. capitalists equal:

Select one:

a. $3 million

b. $6 million

c. $18 million

d. None of the above

Consider the figure above. The immigrant workers earn:

Select one:

a. $ 24 million

b. $ 10 million

c. $9 million

d. None of the above

Explanation / Answer

1 A

2 C

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