Sia
Question
Microeconomics
Posted 9 months ago
Which of the following leads to an increase in wages and employment in the labor market?
Choose 1 answer:
(A) an increase in the demand for the good that labor produces
(B) a decrease in the supply of labor
(C) an increase in the supply of labor
(D) a decrease in the tastes and preferences for the good that labor produces
(E) an increase in the price of a good that is a complement to the good that labor produces
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Answer from Sia
Posted 9 months ago
Solution
a
Increase in Demand for the Good: When there is an increase in the demand for the good that labor produces, firms will need to hire more workers to increase production. This increased demand for labor can lead to higher wages as firms compete to attract the necessary workers
b
Decrease in Supply of Labor: A decrease in the supply of labor means there are fewer workers available for the same number of jobs. This scarcity of labor can drive up wages as firms compete to hire the limited number of workers. However, this does not necessarily lead to an increase in employment
c
Increase in Supply of Labor: An increase in the supply of labor means more workers are available. This can lead to lower wages due to the higher competition among workers for jobs. It does not lead to an increase in wages
d
Decrease in Tastes and Preferences: A decrease in the tastes and preferences for the good that labor produces will lead to a decrease in the demand for that good. This will result in lower demand for labor, potentially leading to lower wages and employment
e
Increase in Price of Complementary Good: An increase in the price of a good that is a complement to the good that labor produces can lead to a decrease in the demand for the primary good. This can result in lower demand for labor, potentially leading to lower wages and employment
Answer
(A) an increase in the demand for the good that labor produces
Key Concept
Demand for Labor
Explanation
An increase in the demand for the good that labor produces leads to higher demand for labor, which can result in higher wages and increased employment.
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