Self-Checkout Kiosks
The question
The competitive labor market for grocery cashiers in the city of Halbrook is in equilibrium. The purchase price of self-checkout kiosks falls to a small fraction of what it was, and one kiosk performs exactly the scanning, bagging, and payment tasks that one cashier performs. Assume grocery prices, the volume of groceries the stores sell, cashiers' own productivity, and the number of people willing to work as cashiers are all unchanged. Show the effect on the labor market for grocery cashiers. Show the effect on the Labor Market graph.
Drag a curve, or use the arrow buttons. Want the free-play version with every control? Open this graph in the sandbox.
Self-Checkout Kiosks: the worked answer
On the Labor Market graph, Labor demand (DL) shifts left.
Why Labor demand (DL) shifts left
The kiosks are a substitute resource for cashiers because they do exactly the same tasks, and the price of a substitute resource is a determinant of labor demand. When the kiosks become far cheaper, stores substitute capital for labor and are willing to hire fewer cashiers at every wage, shifting labor demand to the left. Grocery prices, sales volume, and cashiers' own productivity are unchanged, so nothing works against the substitution, and the number of people willing to work is unchanged, so labor supply stays put.
What happens to the equilibrium
The equilibrium market wage falls and the level of employment decreases.
The mistake students make on this one
Many students shift labor demand RIGHT, borrowing the rule that new technology raises productivity and therefore MRP. That rule applies when the machine makes each worker more productive, but this kiosk replaces the worker rather than assisting one, and the stem holds cashiers' own productivity constant, so only the substitution effect operates.
On exam day
For any resource-price stem, first classify the other input as substitute or complement: a cheaper SUBSTITUTE shifts labor demand left, while a cheaper COMPLEMENT shifts it right.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when Labor demand (DL) shifts left and every other curve on the Labor Market graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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