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ECON MICRO

5th Edition
William A. McEachern
ISBN: 9781337000536

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ECON MICRO

5th Edition
William A. McEachern
ISBN: 9781337000536
Textbook Problem

(Shifts of Resource Demand) A local pizzeria hires college students to make pizza, wait on tables, take phone orders, and deliver pizzas. For each situation described, determine whether the demand for student employees by the restaurant would increase, decrease, or remain unchanged. Explain each answer.

a. The demand for pizza increases.

b. Another pizzeria opens up next door.

c. An increase in the minimum wage raises the cost of hiring student employees.

d. The restaurant buys a computer system for taking phone orders.

e. The restaurant develops a Web site so customers can order online.

To determine

Whether the demand would increase, decrease or remain unchanged for the each situation described below

Concept Introduction:

Demand: The ability and willingness of the consumer to be able to purchase a good at a given quantity and price over a set period of time.

Demand for labour: This is a concept that defines the amount of demand for labour that an economy or firm is willing to employ at a given point of time.

Explanation

To understand the shifts in demand for resources, here in our example, demand for labor, we can see that, for each part.

a. When the demand for pizza increases, there will be an increase in the demand for student employees as demand for labor is a derived demand.

b. It will remain unchanged as there is no difference to the demand for pizzas in the given pizzeria.

c. Will reduce the number of student employees as the pizzeria has to now pay more than what it was paying earlier...

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