Question

5) According to a 2016 article in the Wall Street Journal, "After years of relative equilibrium, job market for nurses is heating up in many markets, driving up wages and sign-on bon the nation's fifth-largest occupation." Many nurses who previously delayed their retirement to the 2008 recession had begun to retire, resulting in a retirement wave that caused nurs exit the workforce in greater numbers than new nurses were entering. At the same time, demand for nurses has increased due to the for nurses has increased due to the additional health care coverage associated with job over the previous decade since the recession and the Affordable Care Act. ay Draw a demand and supply graph illustrating these developments in the market nurses. Based on your diagram, forecast what will happen to the equilibrium wage for nurses as a result of the shift(s)? Is this consistent with what we actually observed? b) Briefly discuss whether this problem provides enough information to determine whether the equilibrium quantity of nurses increased or decreased. Source: Melanie Evans, "Nurses Are Again in Demand," Wall Street Journal, November 7, 2016, https://www.wsj.com/articles/nurses-are-again-in-demand-1478514622.

Answer 1

Two situations take place in the given question. • Supply of nurses reduces, shifting supply curve to left (due to early retirement) Demand for nurses increases, shifting demand curve to right (due to increased demand because of high health coverage) Thus, graphically, the situation can be represented as below: S .. .-..-.- As it can be seen, while wages of nurses rise, the effect on quantity or employment of nurses will depend upon the relative magnitude of shift of demand and supply curves (or their relative elasticities) No. Additional information is needed on relative size of shift of demand and supply curves, or their elasticities, in order to determine whether the equilibrium Q of nurses will increase or decrease.