In Figure 30.1, the labor supply could shift from S1 to S2 due to all of the following except
A) Fewer workers preferring to work in this labor market.
B) An increase in the number of workers willing to work in this labor market.
C) A decrease in the payroll tax on workers.
D) A decrease in the attraction of leisure activities.

Question

In Figure 30.1, the labor supply could shift from S1 to S2 due to all of the following except
A) Fewer workers preferring to work in this labor market. 
B) An increase in the number of workers willing to work in this labor market. 
C) A decrease in the payroll tax on workers. 
D) A decrease in the attraction of leisure activities.

Quizplus · Accepted Answer

Option A states that there are fewer workers preferring to work in this labor market. This would cause a leftward shift of the labor supply curve from S1 to S2, resulting in a decrease in the equilibrium wage rate and an increase in equilibrium employment level. The other options (B, C, and D) would cause an increase in labor supply and a rightward shift of the curve, resulting in an increase in the equilibrium wage rate and a decrease in the equilibrium employment level.