Consider two related labor markets, C and D. Suppose that wages in labor market D fall. Which of the following is the most likely cause of falling wages in labor market D?

Question

Quizplus · Accepted Answer

If the marginal revenue curve in the product market that employees in labor market D supply with goods shifts to the left, this means that demand for the product has decreased. As a result, employers in labor market D may decrease the wages they offer to employees in order to cut costs and maintain profitability. Therefore, the most likely cause of falling wages in labor market D is a decrease in demand for the product they produce, as represented by a leftward shift in the marginal revenue curve.

Consider Two Related Labor Markets, C and D