Scenario: There Are Two Regional Labor Markets in a Country

question 104

Multiple Choice

Scenario: There are two regional labor markets in a country, X and Y. Workers are equally qualified to perform the same type of job in either region. The labor demand in both markets is identical.
-Refer to the scenario above.Let the cost of living be the same in the two regions,and suppose that workers have no non-monetary preferences with respect to the region in which they work and live.If the current wage in market X is larger than in market Y,how do you expect the markets to react?

• A) No change will occur because of the differences in compensating wages.
• B) Labor supply should increase in market X and decrease in market Y.
• C) Labor demand should increase in market X and decrease in market Y.
• D) D Labor demand should decrease in market X and increase in market Y.

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Definitions:

Settlement

The process of fulfilling the terms of a contract or agreement, often involving the payment for goods or services or the clearing of a financial instrument.

Probate

A legal process that deals with the assets and debts of a deceased person, ensuring proper distribution according to the will or the law.

Resided

To have been domiciled or located in a particular place.

Trust's Principal

The original assets placed into a trust by the grantor, excluding any income or appreciation generated by those assets.