A decrease in the real wage would result in a A) movement along the labor demand...

A decrease in the real wage would result in a

A) movement along the labor demand curve, causing an increase in the number of workers hired by the firm.

B) shift of the labor demand curve, causing an increase in the number of workers hired by the firm.

C) movement along the labor demand curve, causing a decrease in the number of workers hired by the firm.

D) shift of the labor demand curve, causing a decrease in the number of workers hired by the firm.

Solutions

Expert Solution

Answer is option A)

as labor demand curve slopes downwards, & is drawn between Labor employed & real wage rate .

so as real wage falls, only movement along demand curve, no shifting occurs, hence B & D are false.

now as real wage falls , Labor demanded rises .

Rahul Sunny answered 1 year ago

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