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Chapter 17: Problem 8

State whether each of the following events will result in a movement along the market supply curve of agricultural labor in the United States or whether it will cause the market supply curve of agricultural labor to shift. If the supply curve shifts, indicate whether it will shift to the left or to the right and draw a graph to illustrate the shift. a. The agricultural wage rate declines. b. Wages outside agriculture increase. c. The law is changed to allow for unlimited immigration into the United States.

Short Answer

Expert verified
a. The declining agricultural wage rate would result in movement along the supply curve. b. An increase in wages outside agriculture would shift the supply curve to the left. c. Changing immigration laws to allow unlimited immigration would shift the supply curve to the right.

Step by step solution

01

Event Analysis: Agricultural wage rate declines

A decline in the wage rate in agriculture will result in movement along the supply curve, rather than shifting the curve. When wages decrease, there is less motivation for laborers to work, therefore reducing the quantity of labor supplied. We essentially move downwards along the supply curve.
02

Event Analysis: Wages Outside Agriculture Increase

If wages increase outside of the agricultural sector, workers may opt to leave agriculture for better-paying jobs, reducing the supply of agricultural labor. This does not result in movement along the current supply curve but shifts the entire supply curve to the left, depicting a decrease in supply.
03

Event Analysis: Law Change Allowing for Unlimited Immigration

If the law is changed to allow for unlimited immigration in the US, it means that more workers are available. These workers can fill in agricultural roles, thus increasing the supply of agricultural labor. Instead of a movement along the supply curve, this causes the entire supply curve to shift to the right, showing an increase in labor supply.

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