A firm's demand curve for labour will shift because of:
A) a decrease in the wage rate.
B) an increase in the wage rate.
C) changes in preferences and the cultural norms that define how much we work.
D) a change in the product's price.

Question

Quizplus · Accepted Answer

A firm's demand for labor is derived from the demand for its products, so a change in the product's price will affect the demand for labor. A decrease in the wage rate would increase the quantity demanded of labor along the existing demand curve, while an increase in the wage rate would decrease the quantity demanded of labor along the existing demand curve. Changes in preferences and cultural norms may affect the labor force participation rate, but they would not directly affect a firm's demand for labor.

A Firm's Demand Curve for Labour Will Shift Because Of