Answer to Question #296099 in Microeconomics for Anike Todd

Question

Assume that workers in the orange farming industry start demanding higher salaries and wages. Illustrate and explain how this would impact the equilibrium price and quantity of oranges

Answer 1

Illustration: The supply curve would shift to the left

Explanation: An increase in the wage is an increase in the cost of an input because labor is an input in orange production. Therefore, the equilibrium price of oranges will rise, but the equilibrium quantity of oranges will fall. It's worth noting that an increase in salaries does not always imply an improvement in worker productivity, which would have had the opposite effect on supply.