Answer to Question #87628 in Microeconomics for Pooben

Question #87628

Tom is a full-time lecturer at a private higher education institution and is considering a career in carpentry. He wishes to pursue a career in carpentry (a childhood dream) which he has studied part-time and is now equipped to take on clients. In his current position he earns a rate of $1000 per day and if he were to pursue a career in carpentry he would earn $800 per day. Due to the flexibility of the employment conditions at the higher education institution he works for, Tom can negotiate the number of days he works at and will receive a rate of remuneration based on the number of days worked.
1.Discuss a factor that could lead to an inward shift of the curve drawn.

Expert's answer

The inward shift of the curve can happen in case overall decline in the economy or significant increase in labor supply, which will cause the decline in the wage rates.