Draw separate diagrams (with all curves and axes labeled) that illustrate the effect of a large number of immigrants entering the country on:a) the MPNb) the MPK
The effect of immigration on the country's MPN or( MPL) curve and MPK curve is as follows:-
Large number of immigrants leads to increase in Labour supply in the country tends to shift in the Supply curve from E0 to E2 which reduced wage rate from w0 to w1 and and increase amt of labour from L1 to L2. As we know labour is employed upto that point where MPL= Real wage rate as labour supply increases Marginal productivity of labour declines .
On the other hand, rental price of capital is constant in short run, only MPK curve shifts rightward from E0 to E1 .
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