An increase in the wage rate will decrease the demand for labor.

Question

Quizplus · Accepted Answer

An increase in the wage rate will generally increase the cost of production for firms, causing them to reduce their supply of labor. However, as the cost of production increases, the price of goods and services may also increase, leading to an increase in demand for labor to produce those goods and services. Therefore, the overall effect on demand for labor is ambiguous and depends on the specific circumstances.

An Increase in the Wage Rate Will Decrease the Demand