9. Suppose that in the island country, there are a large number of identical firms. Boththe product market and the labor market are perfectly competitive. Each firm hasthe following production function:q= √En + E + ln(5En + 5Ei + 10) – In(10),where En is the employment of native workers and E; is the employment of migrantworkers. Which of the following statements is correct?(a) Native workers and migrant workers are perfect complements in the productionprocess. A sudden increase in E; lowers native employment in the short runas well as in the long run.(b) Native workers and migrant workers are imperfect complements in the produc-tion process. A sudden increase in E; lowers native employment in the shortrun but not in the long run.(c) Native workers and migrant workers are perfect substitutes in the productionprocess. A sudden increase in E; lowers native employment in the short runbut not in the long run.(d) Native workers and migrant workers are perfect substitutes in the productionprocess. A sudden increase in E; lowers native employment in the long runbut not in the short run.(e) Because of the increasing return to scale, a sudden increase in E; has no impacton the labor market of this country.

Perfect substitute production function is the one in which only thing which matters to attain a…

9. Suppose that in the island country, there are a large number of identical firms. Bot the product market and the labor market are perfectly competitive. Each firm ha the following production function: q=√√√En + Ei + ln(5En + 5E; + 10) — In(10), where En is the employment of native workers and E; is the employment of migran workers. Which of the following statements is correct? (a) Native workers and migrant workers are perfect complements in the productio non! :.

9. Suppose that in the island country, there are a large number of identical firms. Bot the product market and the labor market are perfectly competitive. Each firm ha the following production function: q=√√√En + Ei + ln(5En + 5E; + 10) — In(10), where En is the employment of native workers and E; is the employment of migran workers. Which of the following statements is correct? (a) Native workers and migrant workers are perfect complements in the productio non! :.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.6P

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