The Figure Given Below Shows the Demand Curves (D₁ and D₂)and

The figure given below shows the demand curves (D₁ and D₂) and supply curves (S₁ and S₂) of labor in the labor market. Figure: 29.2 According to Figure 29.2, assume that the market is in an initial equilibrium in which the labor supply is S₁ and the labor demand is D₁.Then labor supply shifts from S₁ to S₂ but the wage remains at its previous equilibrium level.Which of the following is true?

A) The economy is still in equilibrium.
B) There is a shortage of 20 workers.
C) There is a shortage of 30 workers.
D) There is a surplus of 30 workers.
E) There is a surplus of 20 workers.

Correct Answer:

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