Suppose the Following Two Events Occur in the Market for Elementary

question 244

Multiple Choice

Suppose the following two events occur in the market for elementary school teachers:
a. Overcrowded schools and education budget cuts have discouraged young college students from pursuing careers in teaching.
b. With an increasing birth rate, the number of children entering the elementary school system is expected to increase significantly over the next ten years.
What is likely to happen to the equilibrium wage and quantity of teachers as a result of these two events?

• A) The equilibrium quantity and the equilibrium wage of elementary school teachers fall.
• B) The equilibrium wage rises and the effect on the equilibrium quantity of elementary school teachers is indeterminate.
• C) The equilibrium quantity falls and the effect on the equilibrium wage of elementary school teachers is indeterminate.
• D) The equilibrium quantity falls and the equilibrium wage of elementary school teachers rises.

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Definitions:

Inelastic

A characteristic of a good or service whose demand or supply is relatively unresponsive to changes in price.

Elastic

A characteristic of a product or service that indicates its demand or supply significantly changes with a change in price.

Unit Elasticity

A situation where a change in the price of a product leads to a proportional change in the quantity demanded or supplied.

Demand

The quantity of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.