Use the accompanying graph, which depicts Mighty Max's labor demand for his duffle-bag business, to answer the questions that follow.

-The labor demand curve shown is calculated based on a duffel-bag price of $10.If the price increases to $20 per bag,what happens to the labor demand curve?
A) It shifts to the left.
B) It shifts to the right.
C) It remains unchanged.
D) The firm moves upward along the labor demand curve.
E) The firm moves downward along the labor demand curve.

Question

Use the accompanying graph, which depicts Mighty Max's labor demand for his duffle-bag business, to answer the questions that follow.
 
-The labor demand curve shown is calculated based on a duffel-bag price of $10.If the price increases to $20 per bag,what happens to the labor demand curve?
A) It shifts to the left. 
B) It shifts to the right. 
C) It remains unchanged. 
D) The firm moves upward along the labor demand curve. 
E) The firm moves downward along the labor demand curve.

Quizplus · Accepted Answer

An increase in the price of duffel bags increases the firm's revenue from each bag sold, leading to a higher demand for labor to produce more bags, thus shifting the labor demand curve to the right.

Use the Accompanying Graph, Which Depicts Mighty Max's Labor Demand