Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, in the labor market for health care employees the equilibrium wage
A)increases, and the equilibrium quantity of labor increases.
B)increases, and the equilibrium quantity of labor decreases.
C)decreases, and the equilibrium quantity of labor increases.
D)decreases, and the equilibrium quantity of labor decreases.

Question

Quizplus · Accepted Answer

With an increase in the output price for health care services, the demand for health care employees will increase, resulting in an increase in the equilibrium wage and equilibrium quantity of labor. This is because higher output prices increase the marginal productivity of labor, leading employers to demand more workers at a higher wage rate.

Consider the Labor Market for Heath Care Workers