Suppose that a rare virus,transmitted by mosquitoes,infects all the people who live in Minnesota.The virus is fatal to all blondes,but everyone else is unaffected.Assuming that land and labor are complements in a farming production function,what would happen to the wages earned by workers and the rents earned by landowners?

Question

Quizplus · Accepted Answer

With the virus only affecting blondes, there would be a decrease in the supply of labor, specifically blonde labor. However, the demand for labor would remain the same, causing wages to increase. On the other hand, since the demand for land is derived from the production of the crops, which require labor, the decrease in supply of labor would also decrease the demand for land. As a result, rents earned by landowners would decrease. Therefore, the correct answer is C.

Suppose That a Rare Virus,transmitted by Mosquitoes,infects All the People