An increase in the real wage would result in a
A)movement along the labor demand curve, causing an increase in the number of workers hired by the firm.
B)shift of the labor demand curve, causing an increase in the number of workers hired by the firm.
C)movement along the labor demand curve, causing a decrease in the number of workers hired by the firm.
D)shift of the labor demand curve, causing a decrease in the number of workers hired by the firm.

Question

Quizplus · Accepted Answer

An increase in the real wage would result in a movement along the labor demand curve, not a shift of the curve. This is because the labor demand curve reflects how many workers firms are willing to hire at different wage levels, holding all else constant. An increase in the real wage makes hiring workers more expensive for firms, leading to a decrease in the number of workers hired.

An Increase in the Real Wage Would Result in a