In the coordination failure model,a rightward shift in the labour supply curve
A) decreases employment and increases real wages.
B) increases employment and decreases output.
C) decreases employment and increases output.
D) decreases employment and decreases output.
E) results in no change in employment and the e real wage.

Question

Quizplus · Accepted Answer

In the coordination failure model, a rightward shift in the labor supply curve results in an increase in the number of workers available for employment. However, in the absence of coordination among employers, this increase in labor supply leads to a decrease in employment and a decrease in output. This is because firms are hesitant to hire more workers due to uncertainty about whether other firms will also increase their hiring and create sufficient demand for the increased output. Hence, the correct answer is that a rightward shift in the labor supply curve decreases employment and decreases output, which is option D.

In the Coordination Failure Model,a Rightward Shift in the Labour