2. Burger King (BK) starts hiring workers at $7/hr. Workers at Taco Bell (TB) ar

Question

2. Burger King (BK) starts hiring workers at $7/hr. Workers at Taco Bell (TB) are earning $6/hr, current market wage rate. What is the likely scenario? (Hint: Be careful of shift directions, whose curve, and what curve.)
a) Workers will leave TB for BK. Leftward shift of BK labor supply curve results in market equilibrium wage increase to $7/hr.
b) Workers will leave TB for BK. Leftward shift of TB labor supply curve results in increase to a new market equilibrium wage rate
c) Workers will leave TB for BK. Rightward shift of BK labor supply curve results in decrease of market equilibrium wage back to $6/hr
d) The market wage rate will remain constant

Explanation / Answer

b) Workers will leave TB for BK. Leftward shift of TB labor supply curve results in increase to a new market equilibrium wage rate

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