Wednesday, November 5, 2014

Test #2, Question 29

It appears there is another publisher's error in the answer key for the questions on the exam. Question 29, which deals with the gains from migration for home and foreign, gives the correct answer for the home country's gain as (c) $500. But, since this represents the area of the triangle enclosed under the foreign labor demand curve and the new equilibrium wage, it represents the gains for foreign capital-owners. The (net) gains for home workers is the area above the home labor demand curve and the new equilibrium wage, which has an area equal to (b) $300.
If you answered (c), I will not penalize your score, since you may have gotten to this conclusion based on your efforts to use the practice assessments to study. If you answered (b), please see me during my office hours so I can review your answer sheet and make the appropriate changes.

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