Suppose that all the necessary conditions exist for the realization of equal wage rates in every labor market, but that currently the wage rate in market X is higher than the wage rate in market Y. We expect that eventually the wage rate

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Quizplus · Accepted Answer

If all necessary conditions exist for equal wage rates, then eventually the wage rates should equalize. As X has a higher wage rate than Y, employers in market Y will have an incentive to hire workers from market X where wages are higher. This will increase the supply of labor in market X, leading to a decrease in wages, while also decreasing the supply of labor in market Y, leading to an increase in wages. Therefore, we can expect wages to decrease in market X and increase in market Y until they eventually equalize.

Suppose That All the Necessary Conditions Exist for the Realization