Suppose the market for autoworkers is initially in equilibrium, but then the demand for automobiles increases and simultaneously the automakers allow autoworkers less flexibility working at the plants. What happens in the market for autoworkers?

Question

Quizplus · Accepted Answer

The increase in demand for automobiles would likely increase the demand for autoworkers, pushing wages up. Allowing less flexibility might deter some from entering the labor market, affecting the supply side ambiguously. Thus, wages would increase, but the quantity of labor could move in any direction depending on the relative strength of these effects.

Suppose the Market for Autoworkers Is Initially in Equilibrium, but Then