by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What Causes Shifts in the Supply Labor?The supply of labor is upward-sloping and adheres to the law of supply: The higher the price, the greater the quantity supplied and the lower the price, the less quantity supplied. The supply curve models the tradeoff between...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What Causes Shifts in the Demand for Labor?The demand curve for labor shows the quantity of labor employers wish to hire at any given salary or wage rate, under the ceteris paribus assumption. A change in the wage or salary will result in a change in the quantity...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Equilibrium Wage?At equilibrium, the quantity supplied and the quantity demanded are equal. Thus, every employer who wants to hire at this equilibrium wage can find a willing worker, and every nurse who wants to work at this equilibrium salary can find a...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do Price, Supply, and Demand in the Labor Market?Markets for labor have demand and supply curves, just like markets for goods. The law of demand applies in labor markets this way: A higher salary or wage—that is, a higher price in the labor market—leads to a...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Government Regulation of Insurance?The U.S. insurance industry is primarily regulated at the state level. Since 1871 there has been a National Association of Insurance Commissioners that brings together these state regulators to exchange information and...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is The Adverse Selection Problem?Adverse selection refers to the problem in which insurance buyers have more information about whether they are high-risk or low-risk than the insurance company does. This creates an asymmetric information problem for the insurance...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Moral Hazard Problem?Moral hazard refers to the case when people engage in riskier behavior with insurance than they would if they did not have insurance. For example, if you have health insurance that covers the cost of visiting the doctor, you may be...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Risk Groups?Not all of those who purchase insurance face the same risks. Some people may be more likely, because of genetics or personal habits, to fall sick with certain diseases. Some people may live in an area where car theft or home robbery is more likely...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Fundamental Law of Insurance?The major additional costs to insurance companies, other than the payment of claims, are the costs of running a business: the administrative costs of hiring workers, administering accounts, and processing insurance claims. For...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How Does the Government provide Social Insurance?Federal and state governments run a number of insurance programs. Some of the programs look much like private insurance, in the sense that the members of a group make steady payments into a fund, and those in the group...
