Figure 7.1

-Refer to Figure 7.1. Start from initial equilibrium. If firms increase their capital stock, the new real wage could be ________ and the new amount of labor employed could be ________.

Question

Figure 7.1
 
-Refer to Figure 7.1. Start from initial equilibrium. If firms increase their capital stock, the new real wage could be ________ and the new amount of labor employed could be ________.

Quizplus · Accepted Answer

An increase in capital stock typically shifts the labor demand curve to the right, leading to a higher real wage and more labor employed, corresponding to point Z for real wage and point C for labor employed.

Figure 7.1 -Refer to Figure 7.1. Start from Initial Equilibrium. If Firms