In the very long run, theoretically there will be
Equilibrium if capital and labor are free to migrate.If
And when this ever happens, what will the global
Economy experience?
A)an equality of wages and marginal product
B)an equality of returns to the owners of capital
C)a fully Paretoefficient world economy with the highest standard of living possible
D)an equality of wages and marginal product, an equality of returns to the owners of capital, and a fully
Paretoefficient world economy with the highest
Standard of living possible

Question

In the very long run, theoretically there will be
Equilibrium if capital and labor are free to migrate.If
And when this ever happens, what will the global
Economy experience?
A)an equality of wages and marginal product
B)an equality of returns to the owners of capital
C)a fully Pareto­efficient world economy with the highest standard of living possible
D)an equality of wages and marginal product, an equality of returns to the owners of capital, and a fully
Pareto­efficient world economy with the highest
Standard of living possible

Quizplus · Accepted Answer

If capital and labor are free to migrate and an equilibrium is reached, all factors of production will be paid their marginal product, leading to an equality of wages and marginal product. Additionally, the returns to the owners of capital will also be equalized. Finally, if the economy is operating at a Pareto-efficient level, this means that resources are being utilized in the most efficient way possible, leading to the highest standard of living for all individuals. Therefore, D is the correct choice.

In the Very Long Run, Theoretically There Will Be