Question

Analyze the following table. What factor is affecting salaries in this situation

Answer 1

simply demand and supply

To understand the answer it is important to understand the definition of supply and demand in the labor market in any economy. The supply and demand for labor are much like the supply and demand for any other service.  Consistent with the law of demand and supply (as price rises, quantity demanded falls and quantity supplied rises.

In the graph, we can see that the impact of population is also mediated by average salary and salary structure, the higher the number of teachers the lower the salary, because the supply is high, when supply is high, demand decreases, which then affects salary, now looking at athletes population, we can see that the salary is higher, simply because the supply of atheles is low.