As long as labor markets are perfectly competitive and workers are mobile,__________ in the demand for low-skill labor in any one sector or location bring _________ for _________workers.

Question

Quizplus · Accepted Answer

An increase in demand for low-skill labor will lead to rising wages for all workers if labor markets are perfectly competitive and workers are mobile. This is because firms will compete for the limited pool of available workers, driving up wages in order to attract and retain employees. Option A is incorrect because an increase in demand for low-skill labor should lead to rising wages, not decreasing prices. Option C is incorrect because an increase in demand should not lead to rising prices, since firms would simply pass on the higher labor costs to consumers in the form of higher prices. Option D is incorrect because a decrease in demand for low-skill labor would not necessarily lead to increased income for skilled workers, as there is no direct relationship between the two.

As Long as Labor Markets Are Perfectly Competitive and Workers