7. Interpreting the supply of labor The following graph depicts the labor supply curve for Neha, a worker in the fast-food industry in Detroit. 20 18 16 14 12 10 WAGE (Dollars per hour) 6 Labor Supply 0 Jiiiiiiiiii 0 1 2 3 4 5 6 T B 9 10 LABOR (Hours worked per day) If the wage rate is $20 per hour, Neha will supply |:] hours of work per day. The wage rate must be per hour for Neha to supply 2 hours of work per day. fewer If the wage rate decreases from $20 per hour to $6 per hour, Neha will supply C] V hours of work per day. 8. Resource markets in the short run and long run Consider the labor market for nurses. Becoming a nurse requires several years of school and traininga significant human capital investment. The following graph shows two labor supply curves for nurses: an orange supply curve labeled "5 (Orange)" and a purple supply curve labeled "5 (Purple)": 80 -- 72 -- 64 S (Orange) 8 (Purple) 48 40 32 WAGE (Dollars per hour) 24 16 0 4 8 12 16 20 24 28 32 36 40 LABOR (Millions of nurses) The curves depict the supply of nurses over two time horizons: the short run and the long run. Part of your assignment is to determine which curve represents which time period. Because the longrun supply curve for nurses is Y responsive to changes in wage than the shortrun supply curve, this curve is V than the shortrun supply curve. Suppose that the population ages, and the higher number of elderly people leads to an increase in demand for medical services. A he labor demand for nurses (derived from the demand for medical services) increases from D1 to D2. On the following graph, use the grey point (star symbol) to indicate the short-run equilibrium price and quantity of labor in the market for nurses after the increase in labor demand. Then use the black point (plus symbol) to indicate the longrun equilibrium price and quantity of labor in the market for nurses after the increase in labor demand. On the following graph, use the grey point (star symbol) to indicate the short-run equilibrium price and quantity of labor in the market for nurses after the increase in labor demand. Then use the black point (plus symbol) to indicate the long-run equilibrium price and quantity of labor in the market for nurses after the increase in labor demand. 80 .+ 72 Long-Run Equilibrium 64 S (Orange) 56 S (Purple) 48 Short-Run Equilibrium 40 WAGE (Dollars per hour) 32 D 2 24 16 8 D1 O 0 8 12 16 20 24 32 36 40 LABOR (Millions of nurses)