If the market wage rate increases, a firm's labor demand curve does not shift but the labor supply curve shifts to the right.

Question

Quizplus · Accepted Answer

If the market wage rate increases, the firm's labor demand curve may shift because the firm may substitute other factors of production for labor if the wages become too high. Additionally, if wages increase, fewer people may be willing to work, which means the labor supply curve shifts to the left rather than to the right.

If the Market Wage Rate Increases, a Firm's Labor Demand