Question

Answer the following questions: 1. Discuss the Economic Benefits from Immigration. 2. Distinguish between Payroll Taxes and Mandated Benefits. 3. Discuss the Cobweb Theory. Give Examples 4. Distinguish between a Monopsony Market and a Monopoly Market

Answer 1

Immigration decreases wage and thus cost of production. This increases comparative advantage of nation, Also more people mean more demand. Further jobs do not move to other country where cheap labour is available

Mandatory benefits are legally required benefits. Payroll taxes are paid by either employee or employer.

Cobweb phenomenon shows why prices may fluctuate in certain types of markets. e G if price of wheat is high during current year farmers may sow more wheat next year. As a result supply increases and prices fall. Next year farmers sow less wheat and prices of wheat economics increase once more. This process will continue and a cobweb like diagram is the result.

Monopsony market is characterised by single buyer which has power to change demand and thus prices. In monopoly there is single supplier of goods