refer to the diagram below, which represents a local labor market consisting of two submarkets. All workers are assumed to be identical.

-Suppose that the wage in B is higher because workers perceive disutility of $2 associated with this job relative to A.Assuming that information is perfect and mobility between jobs is costless,we can conclude that:
A)the wage differential between jobs A and B is an equilibrium differential
B)workers will flow from job A to job B
C)workers will flow from job B to job A
D)the demand for labor in B will fall and the demand for labor in A will rise

Question

refer to the diagram below, which represents a local labor market consisting of two submarkets. All workers are assumed to be identical.

-Suppose that the wage in B is higher because workers perceive disutility of $2 associated with this job relative to A.Assuming that information is perfect and mobility between jobs is costless,we can conclude that:
A)the wage differential between jobs A and B is an equilibrium differential 
B)workers will flow from job A to job B 
C)workers will flow from job B to job A 
D)the demand for labor in B will fall and the demand for labor in A will rise

Quizplus · Accepted Answer

The wage differential compensates for the perceived disutility of job B relative to job A, maintaining equilibrium as workers are indifferent between the two jobs due to the compensation for the disutility.

Refer to the Diagram Below, Which Represents a Local Labor