Suppose the Following Two Events Occur in the Domestic Market

question 60

Multiple Choice

Suppose the following two events occur in the domestic market for radiologists:
a. Some hospitals are outsourcing some radiology services such as reading x-rays.
b. Some medical schools have closed down their radiology departments as fewer students enroll in this field.
What is likely to happen to the equilibrium wage and quantity of radiologists following these two events?

• A) The equilibrium wage and the equilibrium quantity of radiologists rise.
• B) The equilibrium wage and the equilibrium quantity of radiologists fall.
• C) The equilibrium quantity falls and the effect on the equilibrium wage of radiologists is indeterminate.
• D) The equilibrium wage falls and the effect on equilibrium quantity of radiologists is indeterminate.

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Definitions:

Butter Purchased

Butter purchased refers to the act of buying butter, a dairy product made from churning cream, typically used as a spread or in cooking.

Black Market

A market in which goods or services are bought and sold illegally, either because it is illegal to sell them at all or because the prices charged are legally prohibited by a price ceiling.

Binding Price Ceiling

A legally established maximum price for goods or services, set below the equilibrium price, leading to shortages.

Supply and Demand

The fundamental model in economics that describes how prices are determined in a market based on the quantity of goods or services available and the desire for them.