A change in the demographics of an economy such that there is an increase in the workers of retiring age will, all else equal, lead to _____ in the equilibrium quantity of labor hired and _____ in the equilibrium wage rate.
A) an increase; an increase
B) a decrease; an increase
C) an increase; a decrease
D) a decrease; a decrease

Question

Quizplus · Accepted Answer

An increase in the number of workers of retiring age means a decrease in the labor force, leading to a decrease in the equilibrium quantity of labor hired. With fewer workers available, employers are willing to pay more to attract the necessary talent, thus increasing the equilibrium wage rate.

A Change in the Demographics of an Economy Such That