Consider a hypothetical economy in which only
Computers and shoes are produced.If two resources
Are being used, labor and capital, then any increase in
Immigration in the long run:
A)will decrease wages in the shoe industry.
B)will decrease wages in the computer industry.
C)will increase wages in the shoe industry.
D)will keep wages constant because marginal products do not change.

Question

Quizplus · Accepted Answer

In the long run, an increase in immigration increases the labor supply, which can initially decrease wages. However, as the economy adjusts, capital and labor are reallocated, and the marginal products of labor and capital return to their original levels, keeping wages constant.

Consider a Hypothetical Economy in Which Only