Question

QUESTION 13

Through the 1990s, the percentage of high school students who decided to get university degrees in Information Technology (IT) increased.

1. Draw a rough demand-supply graph to illustrate the eventual effect on the wage rate paid to IT graduates. (No numbers are required.) 2 marks.
2. Explain its effect on the market for university lecturers specializing in IT in terms of salaries and employment. 2 marks.

Answer 1

A)

With more students enrolling in IT programs, supply of IT graduates will increase. This will shift supply curve to the right. Keeping demand unchanged, a rightward shift of the supply curve of graduates will lead to a fall in wage rates and increase in employment.

B)

With more students keen on enrolling in IT programs, demand for university lecturers to teach them will also increase. Demand curve for lecturers will increase, shifting to the right, leading to an increase in both wages and employment of University lecturers.