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Question
Microeconomics
Posted 9 months ago
What happens to employment and wages in the market for labor based on the graph shown here?
Choose 1 answer:
A employment increases; wages decrease
B employment decreases; wages don't change
(C) employment decreases; wages decrease
D employment doesn't change; wages increase
(E) employment increases; wages increase
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Answer from Sia
Posted 9 months ago
Solution
a
Analysis of the Graph: The graph likely shows the labor market with labor demand and labor supply curves
b
Shift in Curves: If the graph indicates a leftward shift in the labor demand curve, it suggests a decrease in demand for labor
c
Impact on Employment: A leftward shift in the labor demand curve typically results in lower employment levels
d
Impact on Wages: A decrease in labor demand also generally leads to lower wages
Answer
C employment decreases; wages decrease
Key Concept
Labor Demand and Supply
Explanation
When the demand for labor decreases (shifts left), both employment and wages tend to decrease. This is because employers need fewer workers and are willing to pay less for labor.
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