After an increase in the demand for construction workers, the market will attain its new long-run equilibrium faster if
A) wages are flexible.
B) wages are inflexible, forcing new people to enter the market.
C) unions restrict the number of new construction workers.
D) people ignore the shortage in the short run.

Question

Quizplus · Accepted Answer

Flexible wages allow the labor market to adjust quickly to changes in demand, ultimately reaching a new long-run equilibrium faster. This is because higher wages will attract more workers to enter the market, while lower wages will incentivize some workers to leave. In contrast, if wages are inflexible or restricted by unions, it may take longer for the market to adjust and reach a new equilibrium, potentially leading to shortages or surpluses of labor in the short run. Ignoring the shortage in the short run (choice D) is not a viable solution as it could lead to projects being delayed or canceled, ultimately hurting the construction industry and the broader economy.

After an Increase in the Demand for Construction Workers, the Market