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Chapter 4: Q 1. (page 103)

In the labor market, what causes a movement along the demand curve? What causes a shift in the demand curve?

Short Answer

Expert verified

Increased labor prices lead to shifting in the demand. Dependency on other technology that will need fewer labor causes shifts in the demand curve.

Step by step solution

01

- Explanation

Labor markets do have demand and supply movement just like any other product market. The job seekers are suppliers and The employers are the demand seekers here in the labor market. Increased labor prices lead to shifting in the demand. Dependency on other technology that will need fewer labor causes shifts in the demand curve.

02

Conclusion

The supply and demand curve move as and when there are changes in the components. In the labor market labor is considered as suppliers and Employers are considered as demand creators. When there is a rise in the price of labor, the demand tends to slow down, as employers would prefer hiring fewer laborers at a high price to do more jobs.

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Most popular questions from this chapter

Other than the demand for labor, what would be another example of a “derived demand?”

Imagine that to preserve the traditional way of life in small fishing villages, a government decides to impose a price floor that will guarantee all fishermen a certain price for their catch.

a. Using the demand and supply framework,

predict the effects on the price, quantity

demanded, and quantity supplied.

b. With the enactment of this price floor for fish, what are some of the likely unintended

consequences in the market?

c. Suggest some policies other than the price floor to make it possible for small fishing villages to continue.

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.

a. The number of people at the most common ages for home-buying increases.

b. People gain confidence that the economy is growing and that their jobs are secure.

c. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans.

d. Because of a threat of a war, people become uncertain about their economic future.

e. The overall level of saving in the economy diminishes.

f. The federal government changes its bank regulations in a way that makes it cheaper and

easier for banks to make home loans.

Are households demanders or suppliers in the goods market? Are firms demanders or suppliers in the goods market? What about the labor market and the financial market?

Select the correct answer. A price floor will usually shift

a. demand

b. supply

c. both

d. neither

Illustrate your answer with a diagram.
See all solutions

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