The quantity demanded of labor will decrease if:
A)the price of the product that the labor produces increases.
B)the productivity of labor increases.
C)the price of labor rises.
D)there is an increase in the supply of a factor labor uses.

Question

Quizplus · Accepted Answer

When the price of labor rises, firms will be less willing to hire workers because labor has become more expensive. This will result in a decrease in the quantity demanded of labor. The other choices would lead to an increase in demand for labor: A) if the price of the product that the labor produces increases, then firms will want to hire more labor to produce more of that product. B) if the productivity of labor increases, then each worker is able to produce more output, which makes labor more valuable and in higher demand. D) if there is an increase in the supply of a factor labor uses, this could potentially increase demand for labor as firms increase production in response to the availability of more resources.

The Quantity Demanded of Labor Will Decrease If