Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In a country called Uncle Sam Land (USL), the labor demand curve is given by: W = K 4L Where W is the wage rate,

In a country called Uncle Sam Land (USL), the labor demand curve is given by:

W = K 4L

Where W is the wage rate, K is a variable determined by accumulated capital stock in the country, and L is the labor force in the country.

K = 500 is supplied by the capitalists in USL.

Next to USL, is Aunt Lewis Land (ALL). ALL is poor and has a Dual Economy. A large number of workers in the agricultural sector there are not productive - they are disguised unemployed. They are looking for jobs. Wage in ALL is institutionally fixed (subsistence wage) at W = 10.

Although USL had built a strong impenetrable border wall to prevent ALL migrants from moving in, a firm in USL, called "Coyote International," was able to fly over the impenetrable wall in a helicopter and bring job seekers from ALL who wanted to migrate to USL. As a result of this, USL labor force increases to 110 (L = 110 now). All workers (including migrants) work no matter what the wage is.

- Draw approximate diagram(s) and answer the following questions:

A. Graphically identify and calculate the capitalists income triangles (CIT) before and after migration.

B. Graphically identify and calculate the workers income rectangles (WIR) before and after migration.

C. Graphically identify and calculate the national incomes of USL before and after migration.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

New Auditors Guide To Internal Auditing

Authors: Bruce R. Turner

1st Edition

1634540549, 978-1634540544

More Books

Students also viewed these Accounting questions

Question

Summarize the environment of recruitment.

Answered: 1 week ago