The graph to the right illustrates the effect of supply elasticity on changes in wages and numbers hired for some factor whose demand increased.

    SI illustrates a very inelastic supply while SE illustrates very elastic supply. An increase in demand causes wage to rise sharply (W* to WI) if supply is inealastic while the added number hired(N* to NI), naturally, can't increase very rapidly. When supply is inelastic an increase in demand typically leads to firms bidding up the wages of those who alreadly have the necessary skills, often "raiding" one another.

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