Suppose that computer programmers work in two industries,X and Y.Both industries are in equilibrium and have identical labor supply and demand curves.Given that other things are unchanged,if the demand for programmers in industry X increases,then:
A)wages will rise in both industries and in the long run total employment will increase.
B)wages will rise in both industries while employment increases in X and decreases in Y.
C)wages will rise in both industries while employment decreases in X and increases in Y.
D)wages will rise more in industry X than industry Y and employment will remain unchanged in both industries.

Question

Quizplus · Accepted Answer

When the demand for programmers in industry X increases, the firms in that industry will have to pay higher wages to attract and retain workers. This will lead to an increase in the wages for programmers in both industries. However, since the labor supply and demand curves are identical in both industries, the increase in wages will only attract more workers to industry X, resulting in an increase in employment in that industry and a decrease in employment in industry Y. Therefore, option B is the correct option.

Suppose That Computer Programmers Work in Two Industries,X and Y