If Immigration Were to Lead to an Inflow of Workers

question 6

Multiple Choice

If immigration were to lead to an inflow of workers so that the overall labor force were to rise to L1, then

• A) wages would rise and payments to capital would fall.
• B) wages would rise and payments to capital would rise.
• C) wages would fall and payments to capital would fall.
• D) wages would fall and payments to capital would rise.

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Definitions:

Arc Elasticity

A measure of a variable's sensitivity or responsiveness to changes in another variable, calculated over a specific range or 'arc'.

Price of Oranges

The cost at which oranges are sold or bought in the market.

Inelastic

Describes demand that is not very sensitive to changes in price, meaning that quantity demanded changes little when prices change.

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in price.