Suppose the marginal revenue product of U.S. is given by MRP = 200-L and that a total of Ln =150 native US. workers supply their labor perfectly inelastically.
a) In the absence of immigration, what is the equilibrium wage and level of employment of native workers?
b) Suppose the government allows 24 immigrants, who are perfect substitutes for native workers, to enter the United States. What is the effect of their influx on the equilibrium?
c) What is the total loss of earnings suffered by the native US workers?
d) Calculate the immigration surplus?