Consider the perfectly competitive labour market for video- game designers. Which of the following will shift the demand curve for these workers to the right?
1) an increase in the equilibrium wage rate for video- game designers;
2) a decrease in the market price of video games;
3) new software that speeds the design process.
A) 2 and 3
B) 1 and 2
C) 2 only
D) 3 only
E) 1 only

Question

Quizplus · Accepted Answer

The demand for video game designers will increase if there is new software that speeds up the design process. This will increase the demand for video games and thus for the designers. The wage rate for video game designers is determined by the intersection of supply and demand. An increase in the equilibrium wage rate will not shift the demand curve; it will only result in movement along the demand curve. A decrease in the market price of video games will decrease the demand for video game designers, so it will shift the demand curve to the left. Therefore, options 1 and 2 are incorrect while option 3 is correct. Hence, option D (3 only) is the answer.

Consider the Perfectly Competitive Labour Market for Video- Game Designers