Given downward-sloping demand for labor and upward-sloping supply of labor, explain if wage increases, decreases, or...

Given downward-sloping demand for labor and upward-sloping supply of labor, explain if wage increases, decreases, or has an indeterminate effect if (a) the number of qualified workers decreases and (b) the number of employers increases. Answer (a) and (b) as two different cases.

Solutions

Expert Solution

case a) if the number of the qualified labor decrease in the market, that will shift the supply curve for the labor to the left and the new equilibrium will be at a higher wages and low quantity of labor in the market.

case b) If the number of employers increases then it will shift the demand curve for the labor to the right, the new equilibrium will be at a higher wage and higher quantity of labor employed.

Rahul Sunny answered 1 year ago

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