Chapter 4: Q, 1 (page 103)
In the labour market, what causes a movement along the demand curve? What causes a shift in the demand curve?
Changes in the wage rate which determines the price of labor causes a movement along the demand curve.
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Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?
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.
In the financial market, what causes a movement along the supply curve? What causes a shift in the supply curve?
Why is a living wage considered a price floor? Does imposing a living wage have the same outcome as a minimum wage?
A price ceiling will have the largest effect:
a. substantially below the equilibrium price. b. slightly below the equilibrium price.
c. substantially above the equilibrium price. d. slightly above the equilibrium price.
Sketch all four of these possibilities on a demand and supply diagram to illustrate your answer
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