Suppose it is observed that the equilibrium wage and employment level have both risenin a competitive labor market. One can inferthat:

Question

Quizplus · Accepted Answer

An increase in both equilibrium wage and employment level suggests an increase in demand for labor. If the supply of labor had increased, the equilibrium wage would have decreased, but if the demand had increased, it would have led to an increase in both wage and employment. Therefore, it can be inferred that the demand for labor has increased.

Suppose It Is Observed That the Equilibrium Wage and Employment