Question

Question 8 - If the supply of labor goes down in a competitive labor market (everything else held constant), the equilibrium wage rate will ______ and the equilibrium quantity of labor will _______.

r	decrease . . . increase
	increase . . . decrease
	increase . . . increase
	decrease . . . decrease

Question 9 - Which of the following statements best illustrates the relationship between the market for products and the market for resources used to produce that product?

	An increase in the price of cameras will decrease the demand for film.
	As income rises, people demand relatively smaller amounts of food.
	An increase in demand for automobiles will increase the demand for auto workers.
	All the above
	None of the above

Answer 1

8.Answer is increase..decrease

because in a competitive market when labor supply decreases it will increase the wage.here every thing else held constant that is supply and demand is constant the workers had to work more.

for example in a candle industry there are 10 workers.each worker make 100 candles per day so that the 10 workers make a total of 1000 candles per day.The demand of candle is 1000/day,so that in this condition demand and supply are in equilibrium state.

when supply of labor goes down in this candle industry for example only 5 workers are now available but the demand is always constant. these 5 workers have to make 1000 candle per day, that is each worker had to make 200 candles ,which pay them more for their increased number of production.so the equilibrium wage rate will increase and the equilibrium quantity of labor decrease due to decreased supply of labor.

9.Answer is An increase in demand for automobiles will increase the demand for auto workers.

because when demand increases for a product the demand of workers who make that product also increase.

here workers are the resources needed to produce automobiles.without resources a company cannot produce their product.