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Author Question: Explain what will happen to the equilibrium price and quantity of satellite TV service if the wages ... (Read 116 times)

Jramos095

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Explain what will happen to the equilibrium price and quantity of satellite TV service if the wages of the workers who provide the satellite TV service increase while at the same time the price of cable television service (a substitute for satellite
 
  TV service) also increases.

Question 2

Refer to the figure above. What is the initial equilibrium employment and wage rate?
 
  A) 10 units of labor and 25 B) 20 units of labor and 25
  C) 30 units of labor and 15 D) 10 units of labor and 35



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recede

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Answer to Question 1

The wage increases will cause supply to decrease and increases in the price of cable television service will cause demand for satellite TV service to increase. Equilibrium price will definitely increase. Equilibrium quantity will depend on whether the decrease in supply or the increase in demand is larger. If the supply decrease is larger than the demand increase, equilibrium quantity will decrease. If the demand increase is larger than the supply decrease, equilibrium quantity will increase.

Answer to Question 2

B





 

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