Use the following to answer question(s): Wage Determination in Perfect Competition

-(Exhibit: Wage Determination in Perfect Competition) All other things unchanged, if the workers in this exhibit are construction workers and there is a slump in construction activity:
A) the market wage of labor will increase.
B) less labor will be hired.
C) the supply of labor will fall.
D) the demand for construction workers will increase.

Question

Use the following to answer question(s): Wage Determination in Perfect Competition
 
-(Exhibit: Wage Determination in Perfect Competition) All other things unchanged, if the workers in this exhibit are construction workers and there is a slump in construction activity:
A) the market wage of labor will increase. 
B) less labor will be hired. 
C) the supply of labor will fall. 
D) the demand for construction workers will increase.

Quizplus · Accepted Answer

A slump in construction activity would decrease the demand for construction workers, causing less labor to be hired. As a result, the equilibrium wage rate would decrease due to decreased demand, not increase (choice A). Additionally, the supply of labor would not fall (choice C) as it is assumed to be constant in the exhibit. Finally, the demand for construction workers would not increase (choice D) as it has decreased due to the slump in construction activity.

Use the Following to Answer Question(s): Wage Determination in Perfect