Answer to Question #93979 in Microeconomics for Emilio

Question

Concerning labour market(please answer from a good market perspective, not from MRPL ), if graduates want to become managers right away and do not accept low-grade jobs- which is high in demand, how will market do allocation? Is that an imperfect market?

Answer 1

If graduates want to become managers right away and do not accept low-grade jobs, which is high in demand, then there will be a surplus of labor to become managers, and a shortage of labor for low-grade jobs. That's why the wages of managers will decrease, and the wages of low-grade workers will increase. That is an imperfect market.