Answer to Question #147433 in Economics for lylyanne kasomgo kitwa

Question

With the aid of appropriate well labelled supply and- demand diagrams explain each of the
following: Government cuts monthly salaries of public employees (civil servants) and the demand
for furniture falls significantly

Answer 1

If the government cuts the monthly wages of civil servants, then the supply of labor falls, which will lead to an increase in the equilibrium wage in the market.