Question

Each of the following scenarios will result in either a shift in the supply curve for labor or a change in the quantity supplied of labor. For each scenario, please indicate whether the change will affect supply or quantity supplied, and in which direction the change will occur.
a. Hot springs are discovered outside of Golden, Colorado, resulting in the construction of several new ski resorts. The resorts offer man personalized services and require a large staff to accommodate customer needs.

What changes:

Which direction:

b. The Federal government decides to adopt a new visa policy for guest workers seeking to immigrate to the United States in order to find jobs. As a result, 30% more work visas are given out than had previously been granted. The change is expected to be permanent.

What changes:

Which direction:

c. A new diet is popularized by a health expert, Richardo Simmonetz, that requires people to eat only fried chicken for six weeks. The popularity of the diet results in more chicken plants being built nationwide to handle the increased demand for chicken.

What changes:

Which direction:

d. Due to low ticket sales, the Broadway production of the musical 'Mister Saigon' decides to have its main actors double up on roles, train them on stagecraft, and have them sell concessions during the intermission, instead of having individual workers for each of these roles.

What changes:

Which direction:

Answer 1

Answer and Explanation:

The changes and direction of each point is described below:-

a. As the resort needs new workers, this moves the demand curve to the right, so that salaries rise, and therefore higher wages contribute to an increase in the quantity offered to the right.

So, the correct answer is it will change the quantity and move in the right direction.

b. If more work visas are provided, supply will switch due to factors other than salaries and supply curve

So, it will change in supply and move in the right direction.

c. More labor is needed for more chicken plants, this will move the demand curve to the right so that wages will rise, and therefore higher wages will lead to an increase in the in quantity supplied to the right

So, the correct answer is it will change the quantity and move in the right direction.

d. Since the production house will now require fewer people, wages will decrease so that the quantity supplied will decrease and the quantity supplied will, therefore change to the left.

So, the correct answer is it will change the quantity supplied and move in the left direction.