(Figure: Competitive Equilibrium in the Labor Market) Use Figure: Competitive Equilibrium in the Labor Market. In the figure, an increase in demand of the good produced will, all else equal, lead to a(n) _____ in the equilibrium quantity of labor and a(n) _____ in the equilibrium price of labor.

Question

Quizplus · Accepted Answer

An increase in demand for the good produced will increase the demand for labor, leading to an increase in the equilibrium quantity of labor. As the demand for labor increases, the equilibrium price of labor will also increase. Therefore, the correct answer is A.