Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses.If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired, what conclusion can you draw?
A)Physician's assistants are more valuable in terms of their productivity.
B)The price elasticity of demand for registered nurses is negative while the price elasticity of demand for physician's assistants is positive.
C)The cross-price elasticity of demand between registered nurses and physician's assistants is positive.
D)The cross-price elasticity of demand between registered nurses and physician's assistants is negative.

Question

Quizplus · Accepted Answer

The positive cross-price elasticity of demand indicates that registered nurses and physician's assistants are substitute goods. When the wage of registered nurses increases, hospitals hire more physician's assistants, suggesting they are substituting one for the other.

Suppose the California Nurses Union Successfully Secured a 12 Percent