-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 wage rate of W₂ and quantity of Qb occur? A)Both the supply of and the demand for labour have decreased. B)The supply of labour has decreased and the demand has increased. C)The demand for labour has decreased and the supply has increased. D)W₂ is a non-equilibrium wage rate that may be the result of successful bargaining by a strong trade union.

Question

Quizplus · Accepted Answer

A new wage rate of W₂ and quantity of Qb, without seeing the graph but based on the description, suggests a wage rate that does not align with the original equilibrium point e. This scenario implies a wage rate that is likely above the equilibrium wage, which could result from successful bargaining by a strong trade union, leading to a higher wage without necessarily reflecting changes in supply and demand fundamentals.

-Refer to the Graph Above to Answer This Question