Exhibit 28-5

-Refer to Exhibit 28-5.In case (1) ,with a rise in the wage rate from W₁ to W₂,the wage bill will fall if

Question

Exhibit 28-5 -Refer to Exhibit 28-5.In case (1),with a rise in the wage rate from W₁ to W₂,the wage bill will fall if

Quizplus · Accepted Answer

The question asks under what conditions the wage bill will fall when the wage rate increases. According to the exhibit, the wage bill is calculated as the product of the wage rate and the quantity of labor demanded, so the wage bill will fall if the decrease in the quantity of labor demanded is greater than the increase in the wage rate. 
Choice A is the correct answer because it provides the condition for this to occur. It states that if the difference between the quantity of labor demanded at the old wage rate and the new wage rate multiplied by the old wage rate is greater than the difference between the new and old wage rates multiplied by the quantity of labor demanded at the new wage rate, then the wage bill will fall. This is consistent with our explanation above. 
The other choices either provide incorrect conditions or are irrelevant to the question.

Exhibit 28-5 -Refer to Exhibit 28-5.In Case (1),with a Rise in the a Rise