Scenario: Red Country and Purple Country have identical aggregate production functions. The amount of physical capital stock available to each country is equal. Labor supply in Red Country is HR, while the labor supply in Purple Country is HP.

-Refer to the scenario above.Suppose Red Country experiences a flux of immigration that significantly increases its workforce.What will happen if the country's physical capital stock remains unchanged?
A) Total efficiency units of labor in Red Country will decrease.
B) Red Country's income per worker will increase.
C) The marginal contribution of labor to Red Country's output will fall.
D) Total output will decrease.

Question

Scenario: Red Country and Purple Country have identical aggregate production functions. The amount of physical capital stock available to each country is equal. Labor supply in Red Country is HR, while the labor supply in Purple Country is HP.
 
-Refer to the scenario above.Suppose Red Country experiences a flux of immigration that significantly increases its workforce.What will happen if the country's physical capital stock remains unchanged?
A) Total efficiency units of labor in Red Country will decrease. 
B) Red Country's income per worker will increase. 
C) The marginal contribution of labor to Red Country's output will fall. 
D) Total output will decrease.

Quizplus · Accepted Answer

The Answer of Scenario: Red Country and Purple Country have identical aggregate production functions. The amount of physical capital stock available to each country is equal. Labor supply in Red Country is HR, while the labor supply in Purple Country is HP.
 
-Refer to the scenario above.Suppose Red Country experiences a flux of immigration that significantly increases its workforce.What will happen if the country's physical capital stock remains unchanged?
A) Total efficiency units of labor in Red Country will decrease. 
B) Red Country's income per worker will increase. 
C) The marginal contribution of labor to Red Country's output will fall. 
D) Total output will decrease.

Scenario: Red Country and Purple Country Have Identical Aggregate Production