Question

Suppose the market for low-skilled labor is in equilibrium, and then two things happen at the same time. First, a large number of low-skill immigrants enters the country, competing with domestic low-skill workers. Second, these immigrants all want to buy more goods and services, and they typically buy goods produced by low-skill workers. Which of the following will occur in the market for low-skill workers a.The number of workers employed will rise, but we cannot tell what will happen to the wage rate. b. The wage rate will fall, but we cannot tell what will happen to the number of workers. c. The number of workers employed will fall, but we cannot tell what will happen to the wage rate. d. The number of workers employed will rise, and the wage rate will fall.

Answer 1

D. The number of workers employed will rise and the wage rate will fall

Step-by-step explanation:

Since the number of labor supply has increased due to large number of low skill immigrant entering the country, this will result to a fall in the wage rate of the worker since labor supply is now greater than labor demand. Also, the number of employed workers will rise due to the fact that the low skilled immigrant buys goods produced by low skill worker because the market would need more workers in order to produce more goods which is in demand