Refer to the Diagram Below, Which Represents a Local Labor

question 20

Multiple Choice

refer to the diagram below, which represents a local labor market consisting of two submarkets. All workers are assumed to be identical.





-Suppose that the wage in B is higher because workers perceive disutility of $2 associated with this job relative to A.Assuming that information is perfect and mobility between jobs is costless,we can conclude that:

• A)the wage differential between jobs A and B is an equilibrium differential
• B)workers will flow from job A to job B
• C)workers will flow from job B to job A
• D)the demand for labor in B will fall and the demand for labor in A will rise

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Definitions:

Normal Profit

The minimum level of profit necessary for a company to remain competitive in the market, often considered the break-even point.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one more unit of a good or service. It is a critical concept in economics for decision-making regarding production levels.

Purely Competitive Market

A market structure characterized by many buyers and sellers, all of whom are selling a homogeneous product, with no single buyer or seller able to influence the market price.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing excess return over perfect competition.