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Microeconomics

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Labor Supply Model: The Walrus and the Carpenter

MICRO-6N$2D7

Some jobs pay far more than others. For example, one is likely to earn far more as a carpenter, which requires specialized skills and education, than as a walrus, which requires a protective layer of blubber.

Accordingly, the wage for carpenters is very high, while the wage for walruses is very low.

Due to changes in market conditions, the hourly wage received by both carpenters and walruses has risen by one dollar per hour. Assume that walruses and carpenters have similar preferences for consumption and leisure.

According to the neoclassical labor supply model, which of the following might occur?

Select all that apply.

A

The walrus and the carpenter will both work more.

B

The walrus and the carpenter will both work less.

C

The walrus will work less and the carpenter will work more.

D

The walrus will work more and the carpenter will work less.