If both the demand for labor and the supply of labor increase,then the equilibrium wage rate ________ and the equilibrium quantity of labor ________.
A) rises; increases
B) might rise, fall, or not change; increases
C) rises; might increase, decrease, or not change
D) falls; increases
E) falls; decreases

Question

Quizplus · Accepted Answer

If both the demand and supply of labor increase, the equilibrium wage rate might rise, fall, or not change because we do not know the magnitude of the shifts. However, the equilibrium quantity of labor will increase because both a greater quantity of workers are willing to work and firms are demanding more workers. Therefore, the best choice is B.

If Both the Demand for Labor and the Supply of Labor