Consider a perfectly competitive labour market that is initially in equilibrium. The country within which this labour market is located has not previously accepted immigrants, but is now considering whether or not to change this policy and start accepting immigrants. One of the key ideas being considered is the impact that immigrants will have on the equilibrium wage earned by local workers in the aforementioned labour market.

The country's Prime Minister has asked you to provide them with advice on the matter.

a) First, the Prime Minister would like to better understand the reasons why the introduction of immigrants into their country might result in a lower equilibrium wage in the aforementioned perfectly competitive labour market.

Describe the general logic as to how the introduction of immigrants into a perfectly competitive labour market might result in a lower equilibrium wage. (2 marks)

b) Next, the Prime Minister would like to better understand the reasons why the introduction of immigrants into their country might not result in a lower equilibrium wage in the aforementioned perfectly competitive labour market.

Describe the general logic as to how the introduction of immigrants into a perfectly competitive labour market might not result in a lower equilibrium wage. (2 marks)