If an asymmetry of information is removed and laborers' preferences change against employment in a labor market, it would __________ employment and __________ the wage at the equilibrium in the market.
A)increase; raise
B)increase; lower
C)decrease; raise
D)decrease; lower

Question

Quizplus · Accepted Answer

Removing information asymmetry typically makes the market more efficient, allowing workers to make better-informed decisions. If their preferences shift against employment, fewer will seek jobs, reducing the supply of labor. This decrease in labor supply, with demand presumably unchanged, would raise the equilibrium wage due to scarcity of labor.

If an Asymmetry of Information Is Removed and Laborers' Preferences