Question

The graph shows the labor market for fast‑food workers. Assume that competition from salad bars causes fast‑food restaurants to reduce their hiring. On the graph, S represents the labor supply curve, and D₀ represents the initial demand curve. D₁ represents the demand curve after competition from salad bars has reduced hiring in the fast‑food labor market. Point W is the initial equilibrium point in the labor market.

Move Point W to the location that best represents the concept of "sticky wages" in the short run.

Attempt 4 > Question 6 of 10 The graph shows the labor market for fast-food workers. Assume that competition from salad bars causes fast-food restaurants to reduce their hiring. On the graph, S represents the labor supply curve, and Do represents the initial demand curve. D1 represents the demand curve after competition from salad bars has reduced hiring in the fast-food labor market. Point W is the initial equilibrium point in the labor market Move Point W to the location that best represents the concept of "sticky wages" in the short run Labor quantity (thousands of workers) Wage rate ($)

Answer 1

The concept of sticky wages or rigid wages will move the equilibrium point from W to W' with the wage rate remaining the same at the level as at before the decision of reducing hiring, but the unemployment rate in the economy has increased to L2L1 because of sticky wages in the short run.

< → Question 6 of 10 Attempt 4 > The graph shows the labor market for fast-food workers. Assume that competition from salad bars causes fast-food restaurants to reduce their hiring. On the graph, S represents the labor supply curve, and Do represents the initial demand curve. Di represents the demand curve after competition from salad bars has reduced hiring in the fast-food labor market. Point W is the initial equilibrium point in the labor market. Move Point W to the location that best represents the concept of "sticky wages" in the short run. Wage rate ($) w L1 Labor quantity (thousands of workers)