Question

Lesson 3.3 DB - Wages and Supply and Demand

Please answer both questions to receive full credit for this assignment.  

Use your Unit 3 Notes Guide to help you craft your answers.  

Be sure to remember to use economic evidence from the lesson to support your opinion.

1. How do we decide how much each person in society should be paid? Why do some jobs receive high wages while others do not? Do wages reflect what types of jobs our society values?

2. View the supply and demand graph below. Analyze how jobs are affected by supply and demand. In the last five months, we've seen a lot in the news about supply, demand and unemployment.  

Using what you know about supply and demand and labor, explain how changes in supply and demand couple impact employment and jobs.

   

Answer 1

1. The most efficient way to decide how much each person in society should be paid is decided by the equilibrium in labor market. It is decided according to the demand for and supply of the labor in a particular industry or segment of the market. This is the reason why some jobs receive high wages while others do not. Doctors or software professionals are much more demanded because of their skill which leads to higher wages for them, whereas an agriculture worker's demand is less because of lower skill and leads to lower wages for them.

Yes, to a great extent wages reflect what types of jobs our society values. A doctor's job with a much higher wage is much more valued by our society than a job of construction worker.

2. An increase in demand for goods and services in the economy leads to higher demand for workers as economic activities increase, thereby demanding more labor, whereas an increase in wage rates leads to increase in supply of labor. Similarly, a decrease in demand for goods and services in the economy leads to a decrease in demand for labor and employment.

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