Question

Thomas Malthus presented a dismal forecast for man-kind, largely due to the effects of population growth.  

a. Show that immigration, like population growth, tends to create unemployment in the short run and reduce the standard of living of workers in the long run, even though it does enhance the economy’s ability to produce. (Show with analysis diagram, ie product market,labor market, or both)

Answer 1

As the population increases, the supply of labor increases, or shifts to the right. There are now more people who are willing to work at each wage level.Due to shift in supply curve rightward wages fall from W to W₁ as show in the diagram and quantity of labor increases from L to L_{1 .}this increase economy's ability to produce more as there are more quantity of labor but it leads to unemployment people are not able to get right wages which leads to poverty and in long run there standard of living falls.

as the population increases, demand in product market increases in short run supply also increases which improves economy's ability to produce but in long run supply did not increase but as population is increasing demand for products increases which leads to rise in price level and quantity as price rises inflation increases and purchasing power falls which cause unemployment and poverty.

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