An increase in hourly wage will ________ the wage line and will lead to ________in the quantity of low-skill labor demanded.
A) shift up; an increase
B) shift up; a decrease
C) shift down; an increase
D) shift down; a decrease

Question

Quizplus · Accepted Answer

Increasing hourly wage will shift the wage line up as it raises the cost of labor for firms. This will lead to a decrease in the quantity of low-skill labor demanded because firms will choose to substitute it with other inputs or reduce their production.

An Increase in Hourly Wage Will ________ the Wage Line