<< Chapter < Page Chapter >> Page >

As the salary for nurses rises, the quantity supplied will rise. If nurses’ salaries in Minneapolis-St. Paul-Bloomington are higher than in other cities, more nurses will move to Minneapolis-St. Paul-Bloomington to find jobs, more people will be willing to train as nurses, and those currently trained as nurses will be more likely to pursue nursing as a full-time job. In other words, there will be more nurses looking for jobs in the area.

At equilibrium    , the quantity supplied and the quantity demanded are equal. Thus, every employer who wants to hire a nurse at this equilibrium wage can find a willing worker, and every nurse who wants to work at this equilibrium salary can find a job. In [link] , the supply curve (S) and demand curve (D) intersect at the equilibrium point (E). The equilibrium quantity of nurses in the Minneapolis-St. Paul-Bloomington area is 34,000, and the equilibrium salary is $70,000 per year. This example simplifies the nursing market by focusing on the “average” nurse. In reality, of course, the market for nurses is actually made up of many smaller markets, like markets for nurses with varying degrees of experience and credentials. Many markets contain closely related products that differ in quality; for instance, even a simple product like gasoline comes in regular, premium, and super-premium, each with a different price. Even in such cases, discussing the average price of gasoline, like the average salary for nurses, can still be useful because it reflects what is happening in most of the submarkets.

When the price of labor is not at the equilibrium, economic incentives tend to move salaries toward the equilibrium. For example, if salaries for nurses in Minneapolis-St. Paul-Bloomington were above the equilibrium at $75,000 per year, then 38,000 people want to work as nurses, but employers want to hire only 33,000 nurses. At that above-equilibrium salary, excess supply or a surplus results. In a situation of excess supply in the labor market    , with many applicants for every job opening, employers will have an incentive to offer lower wages than they otherwise would have. Nurses’ salary will move down toward equilibrium.

In contrast, if the salary is below the equilibrium at, say, $60,000 per year, then a situation of excess demand or a shortage arises. In this case, employers encouraged by the relatively lower wage want to hire 40,000 nurses, but only 27,000 individuals want to work as nurses at that salary in Minneapolis-St. Paul-Bloomington. In response to the shortage, some employers will offer higher pay to attract the nurses. Other employers will have to match the higher pay to keep their own employees. The higher salaries will encourage more nurses to train or work in Minneapolis-St. Paul-Bloomington. Again, price and quantity in the labor market will move toward equilibrium.

Shifts in labor demand

The demand curve for labor shows the quantity of labor employers wish to hire at any given salary or wage rate, under the ceteris paribus    assumption. A change in the wage or salary will result in a change in the quantity demanded of labor. If the wage rate increases, employers will want to hire fewer employees. The quantity of labor demanded will decrease, and there will be a movement upward along the demand curve. If the wages and salaries decrease, employers are more likely to hire a greater number of workers. The quantity of labor demanded will increase, resulting in a downward movement along the demand curve.

Questions & Answers

what is mutation
Janga Reply
what is a cell
Sifune Reply
how is urine form
Sifune
what is antagonism?
mahase Reply
classification of plants, gymnosperm features.
Linsy Reply
what is the features of gymnosperm
Linsy
how many types of solid did we have
Samuel Reply
what is an ionic bond
Samuel
What is Atoms
Daprince Reply
what is fallopian tube
Merolyn
what is bladder
Merolyn
what's bulbourethral gland
Eduek Reply
urine is formed in the nephron of the renal medulla in the kidney. It starts from filtration, then selective reabsorption and finally secretion
onuoha Reply
State the evolution relation and relevance between endoplasmic reticulum and cytoskeleton as it relates to cell.
Jeremiah
what is heart
Konadu Reply
how is urine formed in human
Konadu
how is urine formed in human
Rahma
what is the diference between a cavity and a canal
Pelagie Reply
what is the causative agent of malaria
Diamond
malaria is caused by an insect called mosquito.
Naomi
Malaria is cause by female anopheles mosquito
Isaac
Malaria is caused by plasmodium Female anopheles mosquitoe is d carrier
Olalekan
a canal is more needed in a root but a cavity is a bad effect
Commander
what are pathogens
Don Reply
In biology, a pathogen (Greek: πάθος pathos "suffering", "passion" and -γενής -genēs "producer of") in the oldest and broadest sense, is anything that can produce disease. A pathogen may also be referred to as an infectious agent, or simply a germ. The term pathogen came into use in the 1880s.[1][2
Zainab
A virus
Commander
Definition of respiration
Muhsin Reply
respiration is the process in which we breath in oxygen and breath out carbon dioxide
Achor
how are lungs work
Commander
where does digestion begins
Achiri Reply
in the mouth
EZEKIEL
what are the functions of follicle stimulating harmones?
Rashima Reply
stimulates the follicle to release the mature ovum into the oviduct
Davonte
what are the functions of Endocrine and pituitary gland
Chinaza
endocrine secrete hormone and regulate body process
Achor
while pituitary gland is an example of endocrine system and it's found in the Brain
Achor
what's biology?
Egbodo Reply
Biology is the study of living organisms, divided into many specialized field that cover their morphology, physiology,anatomy, behaviour,origin and distribution.
Lisah
biology is the study of life.
Alfreda
Biology is the study of how living organisms live and survive in a specific environment
Sifune
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply

Get Jobilize Job Search Mobile App in your pocket Now!

Get it on Google Play Download on the App Store Now




Source:  OpenStax, Macroeconomics. OpenStax CNX. Jun 16, 2014 Download for free at http://legacy.cnx.org/content/col11626/1.10
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Macroeconomics' conversation and receive update notifications?

Ask