Praxis II: Economics Content Knowledge Exam Prep

Answer - C - If the number of people who are graduating from medical school increases each year, then doctors’ salaries will decrease only if the demand is less than the supply.

Key Takeaway: As always, both supply and demand are a factor. If the supply of new doctors increases, doctors’ salaries will only fall if the supply curve for doctors increases more than the demand curve for doctors increases. That is, the supply curve needs to shift to the right more than the demand curve shifts.