If the wage rate in the labor market is $17 and the productivity of workers decreases, which of the following statements is incorrect?

Question

Quizplus · Accepted Answer

D is correct because when wages are sticky (meaning they do not adjust downward easily or quickly) and productivity decreases, employers value the labor less at the current wage rate, leading to a surplus of labor (unemployment) as they seek to hire fewer workers. A and B are also correct, reflecting the outcomes of decreased productivity on labor demand and wage flexibility. C is incorrect because a decrease in productivity with sticky wages would lead to a surplus of labor, not a shortage.

If the Wage Rate in the Labor Market Is $17