A firm's demand curve for labor will shift because of:
A)a decrease in the wage rate.
B)an increase in the wage rate.
C)changes in preferences and the cultural norms that define how much we work.
D)a change in the product's price.

Question

Quizplus · Accepted Answer

The demand for labor is derived from the product demand. When the product's price changes, it affects the demand for labor as the firm will need to adjust the amount of labor to meet the change in demand for the product. Therefore, a change in the product's price will shift the demand curve for labor. A and B are incorrect because a change in the wage rate will not shift the demand curve for labor, but instead, it will move us along the existing demand curve. C is incorrect because changes in preferences and cultural norms may affect the supply of labor, but they will not shift the demand curve for labor.

A Firm's Demand Curve for Labor Will Shift Because Of