Multiple Choice
A low birthrate in Japan led to a general increase in the age of the population in the country. During the 1990s, this led to a decrease in the number of working age people in Japan. What would we expect to occur in the labor market?
15. Markets for the Factors of Production
Shifts in Labor Supply
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The wages paid to pastry and sous chefs are $15 and $25, respectively. If pastry and sous chefs are alternative opportunities and the sous chef wage increased to $30, what would occur in the labor market for pastry chefs?
A
Labor demand increases
B
Labor demand decreases
C
Labor supply increases
D
Labor supply decreases
Verified step by step guidance1
Identify the initial wages for both pastry chefs ($15) and sous chefs ($25).
Recognize that pastry and sous chefs are alternative job opportunities, meaning workers may choose between these jobs based on wages.
Observe that the wage for sous chefs increases from $25 to $30, making the sous chef position more attractive relative to the pastry chef position.
Understand that as the sous chef wage increases, some pastry chefs may decide to switch to become sous chefs, as the opportunity cost of staying as a pastry chef has increased.
Conclude that the labor supply for pastry chefs will decrease because some workers will leave the pastry chef market to take advantage of the higher wages offered to sous chefs.
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