If the supply of labour increases, then the equilibrium wage rate ________ and the equilibrium quantity of labour ________.

Question

Quizplus · Accepted Answer

According to the law of supply and demand, an increase in the supply of labour will result in a decrease in the equilibrium wage rate, as more workers are available and employers have more options to choose from. At the same time, the equilibrium quantity of labour will increase, as more workers are hired at the lower wage rate. Therefore, B is the best choice as it accurately describes the relationship between an increase in labour supply and the equilibrium wage rate and quantity of labour.

If the Supply of Labour Increases, Then the Equilibrium Wage