If the demand for labour is unchanged, an increase in the supply of labour will lead to
A)a decrease in the quantity of labour demanded and a decrease in the equilibrium wage.
B)an increase in the quantity of labour demanded and a decrease in the equilibrium wage.
C)an increase in the quantity of labour demanded and an increase in the equilibrium wage.
D)a decrease in the quantity of labour demanded and an increase in the equilibrium wage.

Question

Quizplus · Accepted Answer

An increase in the supply of labor will result in a decrease in the equilibrium wage because employers can hire more workers at a lower wage, leading to an increase in the quantity of labor demanded. This happens because the labor market is governed by the law of supply and demand. When there is an increase in the supply of labor, the supply curve shifts to the right, which causes the equilibrium wage to fall. However, at the same time, the increased supply of labor will lead to an increase in the quantity of labor demanded by employers since they can now hire more workers at the lower wage.

If the Demand for Labour Is Unchanged, an Increase in the Supply