If the wage rate is below the equilibrium,then

Question

Quizplus · Accepted Answer

If the wage rate is below the equilibrium, employers will find it profitable to hire more workers at the lower wage. This will increase the demand for labor, causing employers to bid up the wage to reach the equilibrium level. Therefore, choice B, the wage will be bid up by employers, is the correct answer. Choice A is incorrect because a decrease in the supply of labor would only occur if the wage was above the equilibrium level, not below it. Choice C is also incorrect because a situation of high unemployment would only occur if the wage was above the equilibrium level, not below it.

If the Wage Rate Is Below the Equilibrium,then