Assume that the labor market is in equilibrium. An increase in the availability of public transportation would shift labor __________ the equilibrium wage and _____ the amount of labor employed.
A) demand to the right, increasing; increasing
B) supply to the right, decreasing; increasing
C) demand to the left, decreasing; decreasing
D) supply to the left, increasing; decreasing

Question

Quizplus · Accepted Answer

An increase in the availability of public transportation makes it easier for more people to get to work, effectively increasing the labor supply. When the supply of labor increases, the equilibrium wage typically decreases because there are more workers available. However, because it is now less expensive for employers to hire (due to the lower wages), the quantity of labor employed increases.

Assume That the Labor Market Is in Equilibrium