Assume that labor and capital are the only two inputs used in production.Given that both inputs are variable,which of the following would lead to a movement along the labor demand curve?
A)A change in the wage rate
B)A change in the productivity of labor
C)An increase in the price of the final product
D)A decrease in the employment of capital

Question

Quizplus · Accepted Answer

A movement along the labor demand curve occurs due to a change in the price (wage rate) of labor. A change in the productivity of labor or an increase in the price of the final product would shift the labor demand curve. A decrease in the employment of capital would have an impact on the production function and shift the production function, but it would not directly lead to a movement along the labor demand curve.

Assume That Labor and Capital Are the Only Two Inputs