Question

A group of workers exist in an area, group A. A new group of workers comes into the area, group B. This new group of workers are perfect substitutes for the first group. The original labor supply group, group A, has a labor supply curve of: S_A(w) = 2w. The new labor supply group, group B, has a labor curve of: S_B(w) = 2 + aw where 0 < a < 1. What's the new total labor supply curve in the area after the arrival of the new group of workers, group B?

Answer 1

The new total labor supply curve in the area after the arrival of group B is obtained by adding the labor supply curves of group A and group B.

Step-by-step explanation:

The new total labor supply curve in the area after the arrival of group B can be obtained by adding the labor supply curves of group A and group B. Group A has a labor supply curve of S_A(w) = 2w, and group B has a labor supply curve of S_B(w) = 2 + aw. To get the new total labor supply curve, we add the two equations:

S(w) = S_A(w) + S_B(w)

S(w) = 2w + 2 + aw

This gives us the new total labor supply curve in the area after the arrival of group B.