Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated, the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal, what effect did these two circumstances have on the equilibrium wage in the labor market for computer programmers?
A)The equilibrium wage increased.
B)The equilibrium wage decreased.
C)The equilibrium wage did not change.
D)It is not possible to determine what happens to the equilibrium wage.

Question

Quizplus · Accepted Answer

The increase in the supply of computer programming graduates due to the dot.com boom and subsequent decrease in demand for their services due to the bust resulted in a shift in the supply curve to the right and a shift in the demand curve to the left. These shifts resulted in a decrease in the equilibrium wage in the labor market for computer programmers.

Consider the Labor Market for Computer Programmers