If the demand for labor is unchanged, an increase in the supply of labor will lead to
A)a decrease in the quantity of labor demanded and a decrease in the equilibrium wage.
B)an increase in the quantity of labor demanded and a decrease in the equilibrium wage.
C)an increase in the quantity of labor demanded and an increase in the equilibrium wage.
D)a decrease in the quantity of labor demanded and an increase in the equilibrium wage.

Question

Quizplus · Accepted Answer

An increase in the supply of labor without any change in demand will lead to a surplus of labor. This means that there will be more workers than the number of jobs available. Employers will be able to pick and choose from a larger pool of workers, which will drive down the equilibrium wage. However, the increase in the supply of labor will also encourage employers to hire more workers, which will increase the quantity of labor demanded. Thus, there will be an increase in the quantity of labor demanded and a decrease in the equilibrium wage.

If the Demand for Labor Is Unchanged, an Increase in the Supply