Question

This question draws on the supply and demand analysis presented in Appendix 1A. Using a graph, show how each of the following labor markets (assumed to be competitive and initially in equilibrium) is affected by the following changes. Explain your reasoning fully. You may draw the graphs by hand on a separate piece of paper and upload the image as a separate file in your submission.

a)Labor market for math and science teachers.
Wages available in private industries utilizing these skills rise.

b)Labor market for university professors.
College enrollments expand.

c)Labor market for low-skilled workers.
The 1996 federal welfare reform legislation requires that a much larger fraction of welfare recipients work than
in the past.

d)Labor market for workers who completed high school only.
The workplace becomes more computerized and technically sophisticated.

Answer 1

a) Wages in private industries increase, decreasing demand for math and science teachers. b) College enrollments expand, increasing demand for university professors. c) Federal welfare reform requires more recipients to work, increasing supply of low-skilled workers. d) Workplace computerization decreases demand for high school workers.

Step-by-step explanation:

Answer:

a) In a competitive labor market for math and science teachers, if wages available in private industries utilizing these skills rise, the demand for math and science teachers will decrease and the supply will increase. This will lead to a decrease in the equilibrium wage and an increase in the equilibrium quantity of math and science teachers employed.
b) In a competitive labor market for university professors, if college enrollments expand, the demand for university professors will increase. This will lead to an increase in the equilibrium wage and an increase in the equilibrium quantity of university professors employed.
c) In a competitive labor market for low-skilled workers, if the 1996 federal welfare reform legislation requires a larger fraction of welfare recipients to work, the supply of low-skilled workers will increase. This will lead to a decrease in the equilibrium wage and an increase in the equilibrium quantity of low-skilled workers employed.
d) In a competitive labor market for workers who completed high school only, if the workplace becomes more computerized and technically sophisticated, the demand for workers with higher skills will increase and the demand for workers who completed high school only will decrease. This will lead to a decrease in the equilibrium wage and a decrease in the equilibrium quantity of workers who completed high school only employed.
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