Several Members of Parliament have been greatly concerned about the fairness of salaries in the marketplace. They are contemplating enacting a law that would fix the wage rate at WA. Their aides have returned with the results of an investigation into the matter, as portrayed in Graphs A and B.
FIGURE 11-1

-Refer to Figure 11-1. If a wage rate of WA for teachers were imposed by the federal government on schools, what would the expected result be?

Question

Several Members of Parliament have been greatly concerned about the fairness of salaries in the marketplace. They are contemplating enacting a law that would fix the wage rate at WA. Their aides have returned with the results of an investigation into the matter, as portrayed in Graphs A and B.
FIGURE 11-1
 
-Refer to Figure 11-1. If a wage rate of WA for teachers were imposed by the federal government on schools, what would the expected result be?

Quizplus · Accepted Answer

Imposing a wage rate of WA, which is above the equilibrium wage, would result in a surplus of teachers. This is because the higher wage would attract more individuals to the profession (Q3), but schools would only be willing to hire a smaller number (Q1) at that wage, leading to a surplus of Q3 - Q1.

Several Members of Parliament Have Been Greatly Concerned About the Fairness