Immigration and Wage Equalization: Suppose we have two cities: Miami and Atlanta. Individuals expect to live 10 years, face an interest rate of 0% per year. Workers in each city have a yearly labour supply given by h(w) = 8 (e. g., workers always work 8 hours a year). Firms face competitive input and output markets and the yearly production technology of firms in each city is f(k, l)=2p l and firms get $10 per unit produced. Suppose that both Miami and Atlanta have 50 workers and 16 firms. Suppose that there is an immigration wave (in period 1) raising the labour supply of Miami by 50 workers. a): After the immigration wave in Miami, what will wages in Miami and Atlanta be if people cannot move?

(b): After the immigration wave in Miami, will wages in Atlanta be higher or lower than $1.75 if people face a moving cost of $3?