Answer to Question 1
Under current WTO rules, a country can adopt any environmental standard it chooses, as long as it does not discriminate against foreign producers by applying its environmental standards on other countries.
Answer to Question 2
Job rationing occurs when the real wage is above its equilibrium level and there is a surplus of labor. In this case, not all the workers who are looking for work can find jobs and therefore the jobs must somehow be dividedrationedamon g them. Three factors can account for job rationing: efficiency wage, the minimum wage, and union wage. An efficiency wage is a wage rate set by a firm above the equilibrium wage rate. An efficiency wage motivates the firm's workers to work hard in order to keep their jobs because the workers know that if they are fired, the wage rate they will get at a new job probably will be less than the efficiency wage. The minimum wage is a government regulation that sets the lowest legal wage. If the minimum wage is set above the equilibrium wage rate, the equilibrium wage rate becomes illegal and, because the minimum wage exceeds the equilibrium wage, a surplus of labor results. Finally, a union wage is a wage rate that results from bargaining between a firm and a labor union. Typically the labor union can negotiate a wage rate that exceeds the equilibrium level in a competitive market and so, once again, there is a surplus of labor.
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