Question

1.Mkt. for farm workers. Many farm workers working on US farms are seasonal migrants. Movement of these workers had been restricted due to health concerns. The health crisis is now solved, travel restrictions are lifted. Lifting travel restrictions affects supply/demand (choose one). Show the effect of lifting travel restrictions on the US labor market for farm workers. Equilibrium wage___, equilibrium employment____

Answer 1

Answer:

The equilibrium wage “fall” and equilibrium employment “Increase”.

Explanation:

The lifting of restriction will affect the supply of labor it will not affect the demand for labor. So lifting of restriction will increase the labor supply due to which supply curve will shift leftwards and wage rate will fall. Thus, a fall in the wage rate will make the product cheaper so the producer will expand its production by hiring more workers. Therefore, employment will also rise.