Question

Predict how each of the following events will raise or lower the equilibrium wage and quantity of coal miners in West Virginia a. The price of oil rises. b New coal-mining equipment is invented that is cheap and requires few workers to run. c. Sever al major companies that do not mine coalopen factories in West Virginia, offering a lot ofwell- paid jobs d. Government imposes costly new regulations tomake coal-mining a safer jot.

Answer 1

1.
A.
When price of oil rises, then demand of coal as a substitute product will increase and shift to the right. it will demand more workers to produce coal. As a result, wage rate of coal workers will increase.

B.
Due to invention of new machine, fewer coal workers will be required. It will decrease the demand of coal workers. As a result, wage rate of coal workers will decrease.

C.
Due to opportunities in other companies getting opened up in the area, supply of coal workers will decrease, but demand of workers will remain same. It will cause wage rate of coal workers to increase.

D.
Due to costly regulations and its impact, coal workers will be in less demand and their demand curve will shift to the left. It will cause wage rate of workers to decrease.

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