The diagram is a supply and demand diagram for the world labor market. Starting at points A and B, consider a situation where some Foreign workers migrate to Home but not enough to reach the equilibrium with full migration (point E). As a result of the migration, the Home wage decreases from A to C, and the Foreign wage increases from B to D

1. Show the gains that accrue to the Home and Foreign countries on the diagram and explain.

Foreign wage 20 19 Home gains 18 A 17 Foreign gains 16 15 Wage E DANWAGONODONWE D B Home wage 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Labor