Question

4. (8 marks) Consider the market for elementary school teachers, and assume that wages and employment are free to vary. What would happen to the wages in the situations listed below: (Show the effects graphically) ) An increase in the wages in occupations closely related to teaching. i) Availability of inexpensive teaching machines (computers, web based tools).

Answer 1

i) an increase in wages in related occupations will lead to decrease in supply of teachers which shifts Ls curve leftwards to Ls'. New equilibrium is reached at e'where equilibrium wage rate is higher at w' and no. Of teachers employed is lower at N'.

ii) availability of inexpensive teaching machines reduces the cost of hiring the teacher. This increases the demand of teachers. Ld curve shifts rightward to Ld'. At new equilibrium both equilibrium wage rate and no. Of teachers are higher.

Ls LS L. Ls ㄥ 0