The market for nurses is highly competitive on both the supply and demand side. Suppose a hospital is trying to determine how many nurses to hire.
a. Graph the hospital's supply and demand for labor to illustrate how the hiring decision will be made.
b. Suppose that a relative scarcity of nurses drives up the market wage nurses receive. Illustrate this increase in the market wage in your graph.
c. Does the increase in the market wage for nurses reduce the demand for nurses? Explain.
d. Show what happens to the demand for nurses and the hiring of nurses when a new type of medical equipment enables them to serve more patients each hour.