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CHAPTER 11: LABOR MARKET QUESTIONS AND VERIFIED ANSWERS|100% CORRECT|GRADE A+
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CHAPTER 11: LABOR MARKET QUESTIONS AND VERIFIED ANSWERS|100% CORRECT|GRADE A+
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CHAPTER 11: LABOR MARKETQUESTIONS AND VERIFIED
ANSWERS|100% CORRECT|GRADE A+
3. Changes in labor supply
Assume that the actuarial and accounting industries employ people with similar skills. Suppose a
decrease in the demand for accountants leads to a fall in their wages, while the demand for actuaries
remains the same.
The following graph shows the labor market for actuaries in the United States.
Show the effect of the fall in demand for accountants on the U.S. labor market for actuaries by shifting
the labor demand curve, the labor supply curve, or both. - ANSWER Demand curve the same, supply
curve shifts right.
As a result, the wage rate for U.S. actuaries falls, and the level of employment increases.
(Since the actuarial and accounting industries use workers with similar skills, changes in the wage level in
the accounting industry will have an impact on the labor supply in the actuarial industry. A decrease in
the demand for accountants leads to lower wages for accountants; thus, the option of working as
actuaries becomes more attractive. Therefore, the labor supply of actuaries increases, shifting the labor
supply curve for actuaries to the right. As a result, the wage rate for U.S. actuaries falls and the level of
employment increases.)
Suppose that a large number of U.S. consultants decide to take employment in Europe due to better
benefits and work environments at European companies.
The following graph shows the labor market for consultants in the United States. - ANSWER Demand
curve the same, Supply curve shifts left.
As a result, the wage rate for U.S. consultants rises , and the level of employment decreases.
, (As consultants leave the U.S. consulting industry for the European consulting industry, the labor supply
of consultants in the United States will decrease, shifting the labor supply curve for consultants to the
left. As a result, the wage rate for U.S. consultants rises and the level of employment decreases.)
Assume that the information technology and consulting industries employ people with similar skills.
Suppose an increase in the demand for consultants leads to a rise in their wages, while the demand for
computer analysts remains the same.
The following graph shows the labor market for computer analysts in the United States. - ANSWER
Demand curve stays the same, supply curve shifts left.
As a result, the wage rate for U.S. computer analysts rises, and the level of employment decreases.
5. Labor unions - Employee power
The following graph shows the labor market for textile workers. Assume that all firms in the textile
industry must hire union workers. The union representing the textile workers enacts a "Buy Union"
advertising campaign. The advertising campaign successfully increases the demand for domestically
produced textiles (all of which are made by unionized workers).
Shift the demand or supply curve on the following graph to illustrate the impact of the union's actions. -
ANSWER Demand shifts right, Supply curve stays the same.
As a result, the wage rate for textile workers rises and the level of employment in the textile industry
increases.
The following graph shows the labor market for plumbers. Assume that all plumbing firms must hire
union-licensed plumbers. The union imposes new rules that increase the length of an apprenticeship
that a worker must complete before becoming a licensed plumber, reducing the number of licensed
plumbers available for work in the plumbing industry.
Shift the demand or supply curve on the following graph to illustrate the impact of the union's actions. -
ANSWER Supply curve shifts left, demand curve stays the same.
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