Economics Question?

Question

Since the September 11th attack there has been an increase in the demand for security personnel--police, air marshals, airport security, etc. How do you think the higher demand has affected the equilibrium wage? In which direction do you think the labor supply and demand shifted? Explain your reasoning.

Answer 1

Well a higher demand alone would most certainly have increased the equilibrium wage. In what direction has the demand shifted? Well you just said upwards. As far as a labor supply shift, you could argue that out of a desire to serve the country there may have been an increase in labor supply. That is not economic theory, however--only speculation. If this were the case this would have a downward effect on the equilibrium wage, leaving the direction of the net change in wage ambiguous.

With an increase in wage, you would certainly see more people working in the sector, but it is very important to note that this would NOT be considered an increase in the labor supply. This would merely be an increase in the quantity of labor supplied. We only consider it to be an increase in labor supply if the supply curve actually shifts, not if we move along it. An increase in labor supply occurs when AT ANY GIVEN WAGE more people will work than they would have at that wage before.

Answer 2

I think supply and demand used to be a very valid point, but I am 56 and have seen a lot of things I don't like in the work force. I am a retired school teacher and found that in most jobs they want to hire someone who will kiss butt to the boss and make the boss look good, so in looking at it from the economic point of view, when I took econ in college in 1970, I think your strategy would work, but now adays, there is so much hanky panky in hiring and they don't necessarily pay higher, they can go overseas and hire someone cheaper and they know it.

Answer 3

The demand increase all over due to high criminal crimes.