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In: Economics

If the price of oil were to drop to $37 a barrel were to stay there...

If the price of oil were to drop to $37 a barrel were to stay there for awhile. What happens to the supply of labor for workers in SUV auto plants? What happens to the demand for workers in SUV auto plants? What happens to the wages paid to workers in SUV auto plants?

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Expert Solution

In terms of economics it is a situation when the price of complimentary goods decreases. It is needless to say that SUV is run by petrol and the price of it has been decreased so far.

As you know if there is a decrease in the price of the complimentary goods then the quantity demanded of that particular goods will be increased that's why the demand curve will be shifted right to ward. It will lead to more demand for SUVs which require more worker.It will lead to more demand for SUVs which require more worker. The supply for the worker will be going to remain the same.

As it is discussed earlier that demand for SUVs will go up which leads to the increase in demand for the workers who used to make SUV.

The wage rate is depend on the demand of the labor. As the demand for labour is increasing the wage rate is also going to increase.

Please don't forget to like the solution if it is helpful. Thank you.

Rahul Sunny answered 1 year ago
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