Suppose the following two events occur in the domestic market for radiologists:
a.Some hospitals are outsourcing some radiology services such as reading x-rays.
b.Some medical schools have closed down their radiology departments as fewer students enrol in this field.
What is likely to happen to the equilibrium wage and quantity of radiologists following these two events?
A)The equilibrium wage and the equilibrium quantity of radiologists rise.
B)The equilibrium wage and the equilibrium quantity of radiologists fall.
C)The equilibrium quantity falls and the effect on the equilibrium wage of radiologists is indeterminate.
D)The equilibrium wage falls and the effect on equilibrium quantity of radiologists is indeterminate.

Question

Suppose the following two events occur in the domestic market for radiologists: 
a.Some hospitals are outsourcing some radiology services such as reading x-rays.
b.Some medical schools have closed down their radiology departments as fewer students enrol in this field.
What is likely to happen to the equilibrium wage and quantity of radiologists following these two events?
A)The equilibrium wage and the equilibrium quantity of radiologists rise.
B)The equilibrium wage and the equilibrium quantity of radiologists fall.
C)The equilibrium quantity falls and the effect on the equilibrium wage of radiologists is indeterminate.
D)The equilibrium wage falls and the effect on equilibrium quantity of radiologists is indeterminate.

Quizplus · Accepted Answer

Event a reduces the demand for domestic radiologists as hospitals outsource radiology services, leading to a potential decrease in the equilibrium wage and quantity of radiologists. Event b reduces the supply of radiologists due to fewer graduates, which could increase the equilibrium wage but decrease the quantity. The combined effect is a clear reduction in quantity, but the effect on wage is indeterminate without knowing the relative magnitudes of these shifts in supply and demand.

Suppose the Following Two Events Occur in the Domestic Market