An increase in the price of aluminum increases the cost of producing aluminum products and reduces the demand for aluminum workers.This decrease in labor demand would be caused by which change in a determinant of labor demand?
A) A fall in labor productivity
B) An increase in product demand
C) A decrease in product demand
D) An increase in the price of another resource

Question

Quizplus · Accepted Answer

An increase in the price of another resource, such as the price of aluminum, is a change in a determinant of labor demand. This leads to a decrease in labor demand, as firms would try to reduce their costs by using fewer workers to produce the same amount of output. Other determinants of labor demand include changes in technology, changes in the price of the product, and changes in the number of firms in the industry.

An Increase in the Price of Aluminum Increases the Cost