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Chapter 4: Q 2. (page 103)

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

Short Answer

Expert verified

Any changes in the labour price, i.e., Salary or wages causes a movement along the supply curve.

The numbers of workers required, education threshold, government policies, etc causes a shift in the supply curve.

Step by step solution

01

Step 1  The Labor demand and supply curve

The higher is the wage offered, the larger will be the pool of laborers who would be willing to work. With low wages, a lesser number of laborers will be willing to participate in the labor market, thus causing a shift in the supply curve.

02

Conclusion 

Any changes in the wages will cause a movement along with the demand for labor. But will not shift the labor supply curves.

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Most popular questions from this chapter

During a discussion several years ago on building a pipeline to Alaska to carry natural gas, the U.S. Senate passed a bill stipulating that there should be a guaranteed minimum price for the natural gas that would flow through the pipeline. The thinking behind the bill was that if private firms had a guaranteed price for their natural gas, they would be more willing to drill for gas and to pay to build the pipeline.

a. Using the demand and supply framework, predict the effects of this price floor on the price, quantity demanded, and quantity supplied.

b. With the enactment of this price floor for natural gas, what are some of the likely unintended consequences in the market?

c. Suggest some policies other than the price floor that the government can pursue if it wishes to encourage drilling for natural gas and for a new pipeline in Alaska.

Under what circumstances would a minimum wage be a nonbinding price floor? Under what circumstances would a living wage be a binding price floor?

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

Which of the following changes in the financial market will lead to an increase in the quantity of loans made and received:

a. a rise in demand

b. a fall in demand

c. a rise in supply

d. a fall in supply

29. Predict how each of the following events will raise or lower the equilibrium wage and quantity of oil workers in Texas. In each case, sketch a demand and supply diagram to illustrate your answer.

a. The price of oil rises.

b. New oil-drilling equipment is invented that is cheap and requires few workers to run.

c. Several major companies that do not drill oil open factories in Texas, offering many well-paid jobs outside the oil industry.

d. Government imposes costly new regulations to make oil drilling a safer job.
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