Suppose that the labor market for high school chemistry teachers is initially in

Question

Suppose that the labor market for high school chemistry teachers is initially in equilibrium. Chemistry teachers use laboratory chemicals as an important part of their jobs. New environmental regulations ban the use of many chemicals, which means that fewer laboratory chemicals are available for high school chemistry teachers to use in their jobs. What happens to the equilibrium wage and quantity of high school chemistry teachers?

Select one:

a. The equilibrium wage decreases, and the equilibrium quantity increases.

b. Both the equilibrium wage and quantity decrease.

c. The equilibrium wage increases, and the equilibrium quantity decreases.

d. Both the equilibrium wage and quantity increase.

Explanation / Answer

As lab equipments get banned, demand for chemistry teachers will fall too.

As a result, demand curve of teachers shifts to the left.

Keeping supply constant, a left shift in demand curve will lead to a fall in both wages and employment of teachers.

Thus correct option is (b) both decrease

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