-Let demand remain constant at D; an increase in wages causes firms to be willing and able to sell 150 fewer units at each price than they were before the wage increase.

Question

Quizplus · Accepted Answer

Since the increase in wages causes firms to sell 150 fewer units at each price, the supply curve will shift to the left. This will lead to a new equilibrium at a higher price and lower quantity. Based on the graph, the new equilibrium will be at point E with a price of $7 and a quantity of 250.

-Let Demand Remain Constant at D; an Increase in Wages