We would expect that a rise in labor supply will have a proportionately larger effect on the market wage rate when

Question

Quizplus · Accepted Answer

When the demand for labor is inelastic, a rise in labor supply will have a larger effect on the market wage rate as the demand is less responsive to changes in supply. This is because firms require the same amount of labor to produce their goods and services, regardless of the supply of labor. Therefore, they may have to increase wages to attract the necessary workers, leading to a larger impact on the wage rate.

We Would Expect That a Rise in Labor Supply Will