When Hurricane Katrina hit, their had to be an increase in hiring insurance people for the area?

Question

In what direction would the shift in labor supply and demand go?
What would be its effect on the equilibrium of the labor market?

I am taking a course in economics and I truly need help in understanding the shift matter. Thank you in advance.

Answer 1

You have an intersecting supply and demand curves graph.

Katrina hits, and demand goes up. There is more work to do than before. This is a whole new change in demands - it is a shift up of the whole demand curve. i.e. At any given wage/price you want more workers than before.

The supply curve you can argue that the labor supply didn't significantly change. (Unless you say supply changed with fewer people able to work as they are Hurricane victims, and labor imported from elsewhere.) The supply curve did not change. You are moving along the existing supply curve. You move along it, having to pay more to increase the supply until you hit equilibrium with the new demand curve.