At Existing Wage Rates, Hospitals Face a Shortage of Registered

Multiple Choice

At existing wage rates, hospitals face a shortage of registered nurses (RNs) .Some studies have suggested that an increase in RN wages will actually reduce the hours supplied by existing RNs, making it more difficult for hospitals to find RNs.Which of the following is likely the cause of these findings?

A) Constant marginal productivity
B) The cost disease
C) A substitution effect larger than the income effect
D) An income effect larger than the substitution effect