SQ5_LaborMarketsAK

Congressional staff economists have urged legislators

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 100. d. If LB=500, then WB=11. Thus, there will be a $3 wage differential between industry A and industry B. e. The market outcome is not efficient. The value of the marginal product of labor in industry B is only 11, while the value of the marginal product of labor in industry A is 14. Since the value of the marginal product of labor is higher in industry A than industry B, total surplus would be higher if workers shifted from industry B to industry A. Total surplus is maximized when the value of the marginal product of labor is the same in both industries. W W 16 16 1600...
View Full Document

This note was uploaded on 02/13/2014 for the course ECON 2 taught by Professor Kim during the Winter '08 term at UCSD.

Ask a homework question - tutors are online