In Market 1, the Demand for Labour Is W₁ =

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. Supposing that there is a minimum wage of $80 in market 1, and assuming that workers must choose to work in market 2 at a market clearing wage, or to search for work in market 1, the allocation of workers to the two markets which equalizes the expected wage rates in the two markets is:

A) 45 workers to market 1 and 55 to market 2.
B) 55 workers to market 1 and 45 to market 2.
C) 60 workers to market 1 and 40 to market 2.
D) 40 workers to market 1 and 60 to market 2.