According to the cost-benefit principle, the number of labor hours demanded will _____, and the number of labor hours supplied will _____ as the wage decreases.

Question

Quizplus · Accepted Answer

According to the cost-benefit principle, as the wage decreases, the cost of hiring additional workers decreases and therefore firms will demand more labor hours. On the other hand, as the wage decreases, workers will find it less attractive to work and may choose to work fewer hours or leave the labor force altogether, leading to a decrease in the number of labor hours supplied. Therefore, (A) rise; fall is the best answer.

According to the Cost-Benefit Principle, the Number of Labor Hours