Answer to Question #307554 in Microeconomics for Shef

Question

Draw a diagram showing the effects of a decrease in the wage rate of bricklayers on the equilibrium market price and output in the annual market for new houses in France.

Answer 1

A decrease in the wage rate of bricklayers causes employers to hire a larger number of workers. This in turn causes an increase in the quantity of labor demanded, resulting in a shift in the demand curve to the right. Hence, the equilibrium market price and output in the annual market for new houses in France are shown by the graph drawn above. Both price and quantity demanded will decrease causing a decrease in the equilibrium market.