6. Consider the labor market for artisanal bakers in the United States. What wou

Question

6. Consider the labor market for artisanal bakers in the United States. What would happen to labor demand or labor supply if the following situations occurred? In other words, will the labor demand curve or labor supply curve shift to the right or to the left? In each scenario, you must say that the labor supply curve or labor demand curve shift to the right or to the left from D1 to D2 or S1 to S2 and WHY. a. Fast-food restaurants and restaurant chains start promoting artisanal foods in order to draw a more sophisticated clientele, and the ad campaign works. b. Happy that their talents are being recognized, artisanal bakers increase their rate of production. c. Tighter immigration laws prevent European bakers from entering the United States to take advantage of higher wages and benefits. d. Droughts have reduced the supply of wheat, which lowers the available amount of flour.

Explanation / Answer

a. D1 shifts to the right to D2 ( because now the demand for artisnal food increases which increases the demand for labor)

b. D1 shifts to the right to D2 (with increased marginal productivity of labor the labor demand curve will shift to the right and more labor will be demanded at same wage)

c. S1 shifts to the left to S2 ( labor supply from foreign countries will reduce)

d. D1 shifts to the left to D2 ( due to less supply of wheat less number of labor will be demanded)

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