If the wage rate increases,a firm's demand for labor curve
A) does not shift, and there is no movement along it.
B) shifts leftward.
C) shifts rightward only if the elasticity of demand for labor is elastic.
D) does not shift, but there is a movement along it.
E) shifts rightward only if the elasticity of demand for labor is inelastic.

Question

Quizplus · Accepted Answer

When the wage rate increases, the firm's demand for labor curve does not shift because the factors affecting the demand for labor do not change. However, there is a movement along the demand curve because the higher wage rate increases the cost of hiring additional workers. Therefore, the firm will demand fewer units of labor at the higher wage rate, resulting in a movement up along the demand curve.

If the Wage Rate Increases,a Firm's Demand for Labor Curve