FIGURE 4.11 Impact of Decreasing Supply of Nurses between 2020 and 2030 The increase in demand for nurses

shown in Figure 4.10 leads to both higher prices and higher quantities demanded. As nurses retire from the work
force, the supply of nurses decreases, causing a leftward shift in the supply curve and higher salaries for nurses at
Pe2. The net effect on the equilibrium quantity of nurses is uncertain, which in this representation is less than Qe1,
but more than the initial Qe0.

While we do not know if the number of nurses will increase or decrease relative to their initial employment, we know

they will have higher salaries.
106 4 • Key Terms

Key Terms

interest rate the “price” of borrowing in the financial market; a rate of return on an investment

minimum wage a price floor that makes it illegal for an employer to pay employees less than a certain hourly

rate

usury laws laws that impose an upper limit on the interest rate that lenders can charge

Key Concepts and Summary
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