Symbols: Q = Number of Workers Demanded; W = Wage

question 191

Multiple Choice

Symbols: Q = number of workers demanded; W = wage rate; and VTP = value of the cumulative total product (output) of the particular number of workers. Assumptions: (1) The current wage in Zinnia is $18, and the current wage in Marigold is $14; (2) full employment exists in both countries. If migration is costless and unimpeded,

• A)no migration will occur.
• B)migration will cause the wage in Marigold to fall.
• C)1 worker will move from Marigold to Zinnia.
• D)2 workers will move from Marigold to Zinnia.

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Definitions:

Subsidies

Financial assistance provided by governments to individuals, businesses, or other entities, aimed at promoting economic activities that are deemed beneficial for the public interest.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, typically because another party bears the cost of those actions.

Car-Insurance Coverage

Protection against financial loss resulting from incidents involving a vehicle, including accidents, theft, and other damages.

Moral Hazard

A situation where one party is more likely to take risks because they do not bear the full consequences of their actions.