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Figure 3.2 S1 15 S2 10 D2 20 30 40 Quantity of Labor In Figure 3.2, if the market is in equilibrium with 30 workers at a wage rate of $15 per day, which of the following must be the corresponding labor supply and demand curves when technology improves? O S1 and D1 S2 and D1 O Cannot be determined from the information given O S2 and D2 Wage Rate ($ per day)

Figure 3.2 S1 15 S2 10 D2 20 30 40 Quantity of Labor In Figure 3.2, if the market is in equilibrium with 30 workers at a wage rate of $15 per day, which of the following must be the corresponding labor supply and demand curves when technology improves? O S1 and D1 S2 and D1 O Cannot be determined from the information given O S2 and D2 Wage Rate ($ per day)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Title: Analysis of Labor Supply and Demand with Technological Improvements** **Figure 3.2: Labor Market Equilibrium** **Graph Explanation:** The graph titled "Figure 3.2" illustrates the relationship between the wage rate (in dollars per day) and the quantity of labor. It features two supply curves, labeled S1 and S2, and two demand curves, labeled D1 and D2. - **Vertical Axis:** Represents the wage rate, ranging from $5 to $15 per day. - **Horizontal Axis:** Represents the quantity of labor, ranging from 0 to 40 workers. - **Equilibrium Point:** Initially located where S1 and D1 intersect at 30 workers and a wage rate of $15 per day. **Curves:** - **S1:** Original supply curve. - **S2:** New supply curve, possibly indicating a response to technological improvements. - **D1:** Original demand curve. - **D2:** New demand curve, possibly indicating a response to technological improvements. **Question:** "In Figure 3.2, if the market is in equilibrium with 30 workers at a wage rate of $15 per day, which of the following must be the corresponding labor supply and demand curves when technology improves?" **Options:** - S1 and D1 - S2 and D1 - Cannot be determined from the information given - S2 and D2 **Considerations:** When technology improves, it typically affects the demand for labor. An improvement in technology could increase productivity, potentially shifting the demand curve (D1 to D2) or supply curve (S1 to S2). Based on the given setup, the equilibrium might change, typically reflecting new intersections between updated supply and demand curves.
Transcribed Image Text:**Title: Analysis of Labor Supply and Demand with Technological Improvements** **Figure 3.2: Labor Market Equilibrium** **Graph Explanation:** The graph titled "Figure 3.2" illustrates the relationship between the wage rate (in dollars per day) and the quantity of labor. It features two supply curves, labeled S1 and S2, and two demand curves, labeled D1 and D2. - **Vertical Axis:** Represents the wage rate, ranging from $5 to $15 per day. - **Horizontal Axis:** Represents the quantity of labor, ranging from 0 to 40 workers. - **Equilibrium Point:** Initially located where S1 and D1 intersect at 30 workers and a wage rate of $15 per day. **Curves:** - **S1:** Original supply curve. - **S2:** New supply curve, possibly indicating a response to technological improvements. - **D1:** Original demand curve. - **D2:** New demand curve, possibly indicating a response to technological improvements. **Question:** "In Figure 3.2, if the market is in equilibrium with 30 workers at a wage rate of $15 per day, which of the following must be the corresponding labor supply and demand curves when technology improves?" **Options:** - S1 and D1 - S2 and D1 - Cannot be determined from the information given - S2 and D2 **Considerations:** When technology improves, it typically affects the demand for labor. An improvement in technology could increase productivity, potentially shifting the demand curve (D1 to D2) or supply curve (S1 to S2). Based on the given setup, the equilibrium might change, typically reflecting new intersections between updated supply and demand curves.
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