Question:

Economics - Aplia?

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The article says that California's farmers face a shortage of field hands. Shortages arise for one of two reasons: price ceilings or sticky prices (prices that adjust slowly to equilibrium changes). While governments commonly implement price floors (or minimum wages) in labor markets, price ceilings (or wage caps) are uncommon in labor markets.

The California government does not impose a price ceiling, or a wage cap, on farm hand wages. The shortage must arise because farm hand wages are sticky and slow to adjust to changes in supply or demand.

A shortage in the labor market for farm hands occurs at any wage where:

A. The quantity of labor supplied exceeds the quantity of labor demanded

B. The quantity of labor demanded exceeds the quantity of labor supplied

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  1. B. The quantity of labor demanded exceeds the quantity of labor supplied.

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