Question

Consider the market for pilots. What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement​ age, say from the age 65 years to the age​ 62? A. The equilibrium wage and the equilibrium quantity of pilots fall. B. The equilibrium wage and the equilibrium quantity of pilots rise. C. The equilibrium wage falls and the equilibrium quantity of pilots rises. D. The equilibrium wage rises and the equilibrium quantity of pilots falls.

Answer 1

Answer: the correct answer is D. The equilibrium wage rises and the equilibrium quantity of pilots falls.

Explanation: if the retirement age is lowered for pilots, it means that there will be fewer pilots in the market so the price for hiring pilots goes up ( the wages go up ) and the equilibrium market is reached with fewer pilots.