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g Suppose economists are trained in theory, methods and practice equally useful in public policy analysis (labor market A) and business administration (labor market B). According to what we learned in labor economics, if there is an increase in the demand for labor in market B, what would we expect to happen to the supply of labor and the equilibrium wage in market A? Use graphs to help you explain what happens in both markets.

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Answer:

In this situation, more economists will aply to labor market B, because demand for them is higher there. This will in turn cause the equilibrium wage in this market to fall, because the higher demadn will be met by higher supply.

In market A, less labor supply will be available, which will in turn raise the equilibrium wage in this market, so that firms in this market can attract the talent that is left.