Suppose that a large tornado destroys the fleet of fire trucks for the city of Omaha, Nebraska. What happens to the earnings of firefighters in Omaha?
A)The reduction in the supply of fire trucks reduces the marginal productivities of Omaha firefighters, which causes the equilibrium wage to fall.
B)The reduction in the supply of fire trucks increases the marginal productivities of Omaha firefighters, which causes the equilibrium wage to fall.
C)The reduction in the supply of fire trucks reduces the marginal productivities of Omaha firefighters, which causes the equilibrium wage to rise.
D)The reduction in the supply of fire trucks increases the marginal productivities of Omaha firefighters, which causes the equilibrium wage to rise.

Question

Quizplus · Accepted Answer

The destruction of fire trucks reduces the firefighters' ability to perform their duties effectively, lowering their marginal productivity and thus causing their equilibrium wage to fall.

Suppose That a Large Tornado Destroys the Fleet of Fire