If exit occurs from the U.S.coal industry and entry occurs into the U.S.solar panel industry,we would expect ________.
A) wages to fall in both the U.S. coal and steel industries
B) wages to fall in the U.S. coal industry but remain constant in the solar panel industry
C) wages to fall in the U.S. coal industry and to rise in the solar panel industry
D) wages to fall in the U.S. coal industry and to rise in the solar panel industry only if the government imposes a wage ceiling in the solar panel industry

Question

Quizplus · Accepted Answer

If there is an exit from the U.S. coal industry and an entry into the U.S. solar panel industry, the supply of labor in the U.S. coal industry will increase, leading to a fall in wages for coal workers. Conversely, the demand for labor in the U.S. solar panel industry will increase, leading to a rise in wages for solar panel workers. Therefore, we would expect wages to fall in the U.S. coal industry and to rise in the solar panel industry.

If Exit Occurs from the U