The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂.

-Refer to the figure above.What are the equilibrium employment and the wage rate after the demand curve shifts to LD₂?

Question

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂.
 
-Refer to the figure above.What are the equilibrium employment and the wage rate after the demand curve shifts to LD₂?

Quizplus · Accepted Answer

The equilibrium employment is 15 units of labor and the wage rate is $20. This is because the demand curve has shifted to LD₂, which means that there is now a higher demand for labor at any given wage rate. This will cause the equilibrium wage rate to increase and the equilibrium employment to increase.

The Following Figure Shows the Labor Demand Curve, LD₁, and Labor