Economic Assignment

Graded Activity 6

The next three questions refer to the graph below. (Assume that the premigration labor force in country A is a and that it is h in country B.) Explain your answers with reference to areas in the graph (1, 2, etc.) or to letters (a, b, c, etc.).

(a) What will happen to wage rates in country A and country B because of the migration of labor from country B to country A?

(b) What will happen to domestic output in country A and country B after immigration?

(c) What will happen to world output given the experience in these two nations?

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