Suppose the Following Two Events Occur in the Domestic Market

question 166

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:

Cost Behaviour

The way in which a cost changes in relation to changes in business activity levels.

Direct Material Costs

The expenses for raw materials that are directly traceable to the manufacturing of a specific product.

Units Produced

The total number of complete units manufactured or finished in a given period.

Fixed Costs Per Unit

Fixed costs per unit decrease as production volume increases, reflecting the spread of costs that do not change with the level of output over a larger number of units.