-Refer to the graph above to answer this question.Suppose that the original supply and demand curves for labour are S₁ and D₁ and that the market is in equilibrium at point e.What can you conclude has happened if a new equilibrium at c occurs? A)The supply of labour,the demand for labour,the wage rate and the equilibrium quantity have all increased. B)The demand for labour and the wage rate have both increased while the supply of labour and the equilibrium quantity have both decreased. C)The demand for labour and the wage rate have both increased while the supply of labour has decreased and the equilibrium quantity has not changed. D)The wage rate has increased,while both the supply of and demand for labour have decreased and the equilibrium wage has remained unchanged. E)The wage rate and the equilibrium quantity have increased while both the demand for and the supply of labour has increased.

Question

Quizplus · Accepted Answer

Moving to a new equilibrium at point c, with an increase in wage rate but no change in equilibrium quantity, indicates that the demand for labor has increased (to pay higher wages for the same quantity of labor), while the supply of labor has decreased (less labor is being supplied at the new higher wage rate), but the quantity of labor hired remains the same.

-Refer to the Graph Above to Answer This Question