Refer to the above graph,which shows the supply and demand for unionized manufacturing workers.The initial equilibrium point is point 1.There is an increase in the demand for manufactured goods while at the same time health benefits for unionized manufacturing workers also increase.Which point would represent the new equilibrium?
A) 3
B) 4
C) 5
D) 6

Question

Refer to the above graph,which shows the supply and demand for unionized manufacturing workers.The initial equilibrium point is point 1.There is an increase in the demand for manufactured goods while at the same time health benefits for unionized manufacturing workers also increase.Which point would represent the new equilibrium?
A) 3 
B) 4 
C) 5 
D) 6

Quizplus · Accepted Answer

An increase in the demand for manufactured goods would shift the demand curve to the right from D1 to D2. This would lead to a new equilibrium point, which is the intersection of the new demand curve (D2) and the original supply curve (S1). However, at the same time, health benefits for unionized manufacturing workers also increase, which would increase the cost of labor and shift the supply curve leftwards from S1 to S2. The intersection of the new demand curve (D2) and the new supply curve (S2) would represent the new equilibrium point, which is point 4. Therefore, the correct choice is B.

Refer to the Above Graph,which Shows the Supply and Demand