How do strong demand and tight supply affect salaries in a region?

• A. Decrease salaries.
• B. Have no effect.
• C. Raise salaries.
• D. Decrease demand for skills.

Answer: (C)

When the demand for workers is strong and the supply of workers is tight, wages rise. Employers compete for a limited pool of skilled labor, bidding up salaries to attract and keep the talent they need. This push continues until the market reaches a new balance with higher pay across the region. The other options don’t fit because salaries wouldn’t drop or stay the same under these conditions, and the notion of decreased demand for skills contradicts the scenario of strong demand.