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Two Events Are Occurring Simultaneously in the Labor Market for Laborers

question 46

Essay

Two events are occurring simultaneously in the labor market for laborers who produce sports apparel.First,the government's campaign to increase the activity rate among its citizens is proving successful,and more people are going to the gym on a regular basis.Second,the sports apparel industry is known for its relatively high pay and good benefits,which are attractive to workers.
a.Graph the effect of each shift separately.Label the original equilibrium wage and quantity W1 and L1,respectively.
b.What needs to be true about the relative size of these shifts if workers in this labor market are to earn higher wages?


Definitions:

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of a product or service.

Average Total Cost

The total cost of production divided by the total quantity produced, representing the average cost per unit of output.

Implicit Costs

The opportunity costs of using resources owned by the business for its operations, not directly paid out in cash.

Delivery Truck

A vehicle specifically designed for transporting goods from one location to another.

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