Question

In: Economics

Match the following changes in equilibrium wages and quantitywith their explanationsequilibrium wage increases and...

Match the following changes in equilibrium wages and quantity with their explanations

  1. equilibrium wage increases and equilibrium quantity decreases

  2. equilibrium wage decreases and equilibrium quantity increases

  3. both equilibrium wage and equilibrium quantity increase

  4. both equilibrium wage and equilibrium quantity decrease

____20. A decrease in the price of a gross substitute to labor

____21. An increase in the availability of nonlabor income.

____22. A decrease in the price of a gross complement to labor

____23. Wages in an alternative occupation decrease

  

Solutions

Expert Solution

20. A decrease in the price of a gross substitute to labor : So demand for labor decreases , people use more of the substitute . d. both equilibrium wage and equilibrium quantity decrease

21. An increase in the availability of nonlabor income : Supply of labor decreases . People get more income elsewhere . a. equilibrium wage increases and equilibrium quantity decreases

22. A decrease in the price of a gross complement to labor : So demand for labor rises , as price of a compliment falls people demand more labor . c. both equilibrium wage and equilibrium quantity increase

23. Wages in an alternative occupation decrease : So people shift from that alternative occupation to this , so supply of labor rises . b. equilibrium wage decreases and equilibrium quantity increases

Rahul Sunny answered 2 years ago
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