Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: Relaxed immigration laws lead to lower labor costs.(See Figure 29.4.)
A) a.
B) b.
C) c.
D) d.

Question

Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: Relaxed immigration laws lead to lower labor costs.(See Figure 29.4.)
A) a. 
B) b. 
C) c. 
D) d.

Quizplus · Accepted Answer

With relaxed immigration laws, the supply of labor in the wheat market is likely to increase, which would lead to lower labor costs. This would shift the supply curve to the right from S1 to S2, which would result in a lower equilibrium price and a higher equilibrium quantity. Option B depicts a shift in the supply curve to the right, leading to a lower equilibrium price and a higher equilibrium quantity, and hence, it is the best choice.

Select the Letter of the Diagram in Figure 28