The diagram below represents the labour market conditions in a highly competitive regional industry, where the supply of labour is perfectly elastic at the going wage rate W1W_1W1.
Which of the following combinations of statements is correct if the demand for labour shifts from DL1D_{L1}DL1 to DL2D_{L2}DL2, resulting in a change in the labour market equilibrium from E1 E_1\,E1 to E2E_2E2?
Statement 1: Economic rent is unchanged; Statement 2: There is infinite wage elasticity of supply of labour
Statement 1: Transfer earnings are unchanged; Statement 2: There is infinite wage elasticity of supply of labour
Statement 1: Economic rent is unchanged; Statement 2: Labour will be supplied whatever the wage rate
Statement 1: Transfer earnings are unchanged; Statement 2: Labour will be supplied whatever the wage rate
