Are all other variables held constant or allowed to change?
Posted on: October 4, 2017 at 11:38:04 CT
ScottsdaleTiger MU
Posts:
12759
Member For:
26.31 yrs
Level:
User
M.O.B. Votes:
0
In partial equilibrium analysis, you are shifting the supply curve for labor to the right and holding the demand curve constant. Therefore, the price of labor will decline and the amount of labor needed to clear the market will increase.
However, partial equilibrium analysis assumes that only one variable, the supply of labor changes. That assumption, that only one variable changes, is seldom if ever correct in the real world.