When the supply of workers is scarce, one would predict that market wages would be:
A)determined solely by factors that affect demand
B)determined outside the domain of the neoclassical theory
C)high, other things being equal
D)low, other things being equal

Question

Quizplus · Accepted Answer

When the supply of workers is scarce, the demand for workers remains constant, which leads to an increase in wages. High wages will help to attract more workers into the market and increase the supply of labor, eventually leading to a market equilibrium. Therefore, high wages are expected when the supply of labor is scarce.

When the Supply of Workers Is Scarce, One Would Predict