Consider the labor market for nurses, which initially is in equilibrium. Suppose the output price for nursing services increases. Holding all else equal, what effect will this have on the labor market for nurses?
A) The equilibrium wage will increase, and the equilibrium quantity of nurses will increase.
B) The equilibrium wage will increase, and the equilibrium quantity of nurses will decrease.
C) The equilibrium wage will decrease, and the equilibrium quantity of nurses will increase.
D) The equilibrium wage will decrease, and the equilibrium quantity of nurses will decrease.

Question

Quizplus · Accepted Answer

An increase in the output price for nursing services makes the services more valuable, increasing the demand for nurses. This leads to higher equilibrium wages and a higher equilibrium quantity of nurses employed.

Consider the Labor Market for Nurses, Which Initially Is in Equilibrium