Figure 12-2

-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?
A)In the short run, wages will increase to W2, but the wage increase will be smaller in the long run.
B)In the short run, wages will be less than W2, but in the long run, they will rise to W2.
C)In the short run, wages will increase to W2, and in the long run, they will be even higher than W2.
D)Employment will increase, but the higher level of demand will not alter the wages of accountants.

Question

Figure 12-2
 
-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?
A)In the short run, wages will increase to W2, but the wage increase will be smaller in the long run. 
B)In the short run, wages will be less than W2, but in the long run, they will rise to W2. 
C)In the short run, wages will increase to W2, and in the long run, they will be even higher than W2. 
D)Employment will increase, but the higher level of demand will not alter the wages of accountants.

Quizplus · Accepted Answer

In the short run, the increase in demand will lead to a temporary shortage of accountants, resulting in higher wages (W2). However, in the long run, the supply of accountants will increase as new people enter the field and existing accountants may work longer hours or take on additional clients. This increased supply will result in a lower wage increase than in the short run, but wages will still be higher than before the increase in demand (above W1 but below W2). Therefore, option A is the best choice.

Figure 12-2 -If an Unanticipated Increase in Demand in Figure 12-2 Shifts