Figure 6.2

-Refer to Figure 6.2.Holding other variables constant,an increase in the real wage will result in a

Question

Figure 6.2 -Refer to Figure 6.2.Holding other variables constant,an increase in the real wage will result in a

Quizplus · Accepted Answer

An increase in real wage will result in a movement along the same curve (S₁ in this case) from point A to point B. This is because a higher real wage makes leisure (non-work time) more expensive, so workers will choose to work more (or work longer hours), leading to a higher quantity of labor supplied. Meanwhile, firms will demand less labor at higher wages, leading to a lower quantity of labor demanded. The new equilibrium point (B) represents a higher real wage and a lower quantity of labor employed.

Figure 6.2 -Refer to Figure 6.2.Holding Other Variables Constant,an Increase in the Constant,an