Lecture 7 Flashcards
1
Q
Assumptions of the common market for labour model
A
1) goods are produced by combining capital and labour
2) workers have identical skills
3) capital is fixed
2
Q
MVP marginal value productivity of labour
A
amount by which output increases with each additional worker
3
Q
CHECK LECTURE 7 FOR DIAGRAM
A
Black book
4
Q
consequences of the common market
A
1) migration
2) convergence of MVP
3) convergence of wage rates
4) higher output in custom market
5) income redistribution across countries
5
Q
model restrictions
A
1) wage flexibility?
2) full employment ?
3) capital fixed?- if poland increased capital there would be less migration
4) externalities
