Suppose an island economy has only two labour markets- fishing (high skill) and farming (low skill). There are 1000 males and 1000 females in the labour force. There is an equal distribution of skilled and non-skilled workers among each sex.
FIGURE 14-1
Refer to Figure 14-1. Suppose the employers in the fishers labour market begin to discriminate against male workers. Which of the following can we expect to occur in the farmers labour market?
◦ The demand for labour curve shifts to the left until a new equilibrium is reached at point C and the wage falls to $60 per day.
◦ There will be an equal flow of workers between the two markets, equilibrium will remain at point E and the wage at $80 per day.
◦ The labour supply curve shifts to the right until a new equilibrium is reached at point D and the wage falls to $60 per day.
◦ The labour supply curve shifts to the left until a new equilibrium is reached at point A and the wage rises to $100 per day.
◦ The demand for labour curve shifts to the right until a new equilibrium is reached at point B and the wage rises to $100 per day.
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