A decrease in market labor supply can occur with a decrease in the working age population as well as:
A) an increase in immigration.
B) a favorable change in tastes and preferences for work.
C) a decrease in nonlabor income.
D) an increase in taxes.

Question

Quizplus · Accepted Answer

An increase in taxes can lead to a decrease in market labor supply because higher taxes reduce the net income people earn from working, making leisure or non-work activities relatively more attractive. This can discourage people from entering the labor market or reduce the number of hours they are willing to work.

A Decrease in Market Labor Supply Can Occur with a Decrease