If the government provides a subsidy of $1 per hour to employers for hiring workers,________.
A) the equilibrium employment will decrease
B) the equilibrium real wage will increase
C) labor supply will increase
D) labor demand will decrease

Question

Quizplus · Accepted Answer

A subsidy to employers for hiring workers effectively lowers the cost of labor, which can lead to an increase in the equilibrium real wage as employers are willing to pay more due to the subsidy.

If the Government Provides a Subsidy of $1 Per Hour