refer to the following graph of the demand for and supply of armed forces personnel.

-Suppose the government uses a voluntary system.Its demand for labor is D_v and it wishes to attract H workers at a wage of $B.Which of the following best describes the distribution of costs that will result?

Question

refer to the following graph of the demand for and supply of armed forces personnel.

-Suppose the government uses a voluntary system.Its demand for labor is D_v and it wishes to attract H workers at a wage of $B.Which of the following best describes the distribution of costs that will result?

Quizplus · Accepted Answer

Since the government is using a voluntary system, it will have to offer a wage equal to the opportunity cost of the potential enlistees to attract H workers. This is represented by the line U1B0. Therefore, enlistees will receive an amount equal to their opportunity cost, which is the area ABEI. Taxpayers will pay the difference between the wage offered and the opportunity cost, which is the area 0BEH. Therefore, the correct answer is D.

Refer to the Following Graph of the Demand for and Supply