Consider the market for pilots.What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from age 65 to age 62?
A)The equilibrium wage and the equilibrium quantity of pilots rise.
B)The equilibrium wage and the equilibrium quantity of pilots fall.
C)The equilibrium wage falls and the equilibrium quantity of pilots rises.
D)The equilibrium wage rises and the equilibrium quantity of pilots falls.

Question

Quizplus · Accepted Answer

If the government enforces a lower mandatory retirement age, the quantity of pilots in the market would increase as more pilots would be forced to retire earlier. This increase in quantity would put downward pressure on the wage, leading to a decrease in the equilibrium wage. At the same time, some older pilots may choose to exit the market earlier, resulting in a decrease in the equilibrium quantity. However, the decrease in quantity would likely be smaller than the increase due to the larger number of pilots retiring early. Overall, there would be a decrease in the equilibrium wage and an increase in the equilibrium quantity of pilots.

Consider the Market for Pilots