In the model with an upward sloping supply curve of labour and increase demand for labour due to a positive technological, A, change:
A)increases employment and the real wage.
B)decreases employment and increases the real wage.
C)decreases employment and the real wage.

Question

Quizplus · Accepted Answer

With an upward sloping supply curve of labour, an increase in demand for labour due to a positive technological change will increase employment and increase the real wage. This is because the increase in demand for labour will result in firms hiring more workers, increasing employment. As competition for workers increases, firms will need to offer higher wages to attract workers, resulting in an increase in the real wage.

In the Model with an Upward Sloping Supply Curve of Labour