Consider the Labor Situation in Countries I and II in a Two-Country

question 5

Multiple Choice

Consider the labor situation in countries I and II in a two-country world with the marginal Physical product schedules MPPL_I (= demand for labor schedule D_I) for country I and Marginal physical product schedule MPPL_II (= demand for labor schedule D_II) for country II shown in the graph below (where the vertical axes also represent real wages) :

Without any migration of labor between the two countries, the labor force is 0L₁ in country I and (in the leftward direction) 0'L₁ in country II. If labor is now allowed to flow freely between the two countries, labor would migrate __________. As a result of the migration, world output would increase by the amount of triangle __________.

• A) from country I to country II; CBA
• B) from country I to country II; FBA
• C) from country II to country I; CFA
• D) from country II to country I; CBA

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Definitions:

Carbon Dioxide Fixation

The process of converting carbon dioxide into organic compounds, such as glucose, during photosynthesis.

Rubisco

An enzyme involved in the first major step of carbon fixation, a process by which atmospheric carbon dioxide is converted by plants to energy-rich molecules.

RuBP

Ribulose bisphosphate, a substance that plays a critical role in the process of carbon fixation in photosynthesis.

PGAL

PGAL, or Phosphoglyceraldehyde, is a three-carbon molecule that plays a crucial role in both photosynthesis and glycolysis, acting as an intermediate in the conversion of glucose and other sugars.