Multiple Choice
In market 1, the demand for labour is w1 = 100 - z1, where w1 is the wage rate and z1 is the number of workers. Similarly, in market 2 the demand for labour is w2 = 100 - z1. There are 100 workers to be allocated to the two markets, and workers are concerned only with their expected wage. Now suppose that there is a minimum wage in market 1 equal to $80, and that market 2 is again perfectly competitive. If 50 workers choose to work in market 2, and 50 choose to search for work in market 1, then the wage rate in market 2 will be $50, and the expected wage rate in market 1 will be:
A) $32.
B) $40.
C) $50.
D) $55.
Correct Answer:
Verified
Correct Answer:
Verified
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