Scientific evidence suggests that nurse practitioners (NPs) and physician assistants (PAs) can be considered as substitutes in providing many types of medical care. When hospitals take hiring decisions, the "price" (i.e. salaries) they have to pay for a new NP versus a new PA is one of the deciding factors. If PAs' salaries have grown substantially during the last 6 months, while there has been no change in the NPs' salaries, what would happen in the market for nurse practitioners' services?

Question

Quizplus · Accepted Answer

When one of the substitutable types of labor (PAs) becomes more expensive, the alternative type of labor (NPs) becomes relatively less expensive, even if its dollar price does not change. Employers will be hiring less PAs and more NPs.

Scientific Evidence Suggests That Nurse Practitioners (NPs) and Physician Assistants