Figure 12-2

-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂,how will the higher level of demand influence the wages of accountants in the short run and the long run?
A)In the short run,wages will increase to W₂,but the wage increase will be smaller in the long run.
B)In the short run,wages will be less than W₂,but in the long run,they will rise to W₂.
C)In the short run,wages will increase to W₂,and in the long run,they will be even higher than W₂.
D)Employment will increase,but the higher level of demand will not alter the wages of accountants.

Question

Figure 12-2
 
-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂,how will the higher level of demand influence the wages of accountants in the short run and the long run?
A)In the short run,wages will increase to W₂,but the wage increase will be smaller in the long run. 
B)In the short run,wages will be less than W₂,but in the long run,they will rise to W₂. 
C)In the short run,wages will increase to W₂,and in the long run,they will be even higher than W₂. 
D)Employment will increase,but the higher level of demand will not alter the wages of accountants.

Quizplus · Accepted Answer

When demand increases from D₁ to D₂, the equilibrium wage rate of accountants will increase from W₁ to W₂ in the short run. However, in the long run, more workers may enter the accounting profession, leading to an increase in the supply of accountants. This increase in supply will put downward pressure on wages, and eventually drive it back down towards its original level. Therefore, the wage increase in the long run will be smaller than in the short run. Thus, option A is the correct answer.

Figure 12-2 -If an Unanticipated Increase in Demand in Figure 12-2 Shifts