Question

4. Should all protessors be paid the same? The following graphs show the supply of and demand for assistant professors in history (left) and in engineering (right) for a hypothetical university. Use the graphs to help you answer the following questions Market for Assistant History Professors Market for Assistant Engineering Professors 7 a0 Demand 120 Demand 84 O 72 32 ー 36 16 Supply 24 Supply 0 7 14 21 28 35 42 49 56 63 0 12 16 20 24 28 32 36 40 QUANTITY (Assistan QUANTITY (Assistant history professors) t engineering professors) The equilibrium wage of an assistant professor in history is $ professors in history. On the other hand, the equilibrium wage of an assistant professor in engineering is$ equilibrium quantity is and the equilibrium quantity is assistant , and the assistant professors in ern Suppose the university sets the same wage for all assistant professors across all departments. Fill in the following table with the quantity demanded and supplied for each type of assistant professor when the university sets the wage at $48,000 and $72,000, respectively University Wage (Dollars) Assistant History Professors Quantity Supplied Assistant Engineering Professors Quantity Supplied Quantity Demanded Shortage or Surplus Quantity Demanded Shortage or Surplus 48,000 72,000 Shortage In summary, if the university sets a wage of $48,000 for all assist Surplus ors in every department, which is equivalent to a price ceiling for Neither engineering professors, there will be g professors hired by the university than there would be if the asSI In summary, if the university sets a wage of $48,000 for all assistant professors in every departme moreis equivalent to a price ceiling for engineering professors, there will be university paid assistant engineering professors their equilibrium wage. Similarly, if the university every department, which is equivalent to a price floor for history professors, there will be the university than there would be if the university paid assistant history professors their equilibrium wage. assistant engineering professors hired b versity than there would be if the fewer e of $72,000 for all assistant professors in assistant history professors hired by

Answer 1

(1) Equilibrium wage for assistant professor in history is $48,000 and equilibrium quantity is 28. Equilibrium wage for assistant professor in engineering is $72,000 and equilibrium quantity is 16.

(2) When quantity demanded > quantity supplied, there is a shortage. When quantity demanded < quantity supplied, there is a surplus.

Wage	History professor			Engineering professor
	Quantity demanded	Quantity supplied		Quantity demanded	Quantity supplied
48,000	28	28	Neither	24	8	Shortage (= 16)
72,000	7	49	Surplus (= 42)	16	16	Neither

(3) If wage is $48,000, there will be 8 fewer (= 16 equilibrium - 8 quantity supplied) assistant professors in engineering. If wage is $72,000, there will be 21 fewer (= 28 equilibrium - 7 quantity demanded) assistant professors in history.