Other things being equal, and assuming an upward sloping labor supply curve, an increase in the demand for labor in manufacturing will

Question

13. Other things being equal, and assuming an upward sloping labor supply curve, an

increase in the demand for labor in manufacturing will

A. have no effect on either the equilibrium wage or the equilibrium quantity of labor

supplied in manufacturing.

B. increase the equilibrium wage but decrease the equilibrium quantity of labor

supplied in manufacturing.

C. decrease the equilibrium wage and quantity of labor supplied in manufacturing.

D. increase the equilibrium wage and quantity of labor supplied in manufacturing.

15. The current market equilibrium wage for automobile workers is $30 per hour. As a

result of a decrease in the demand for new cars the demand for labor in the

automobile industry declines. Other things being equal, if the wages of automobile

workers remain $30 per hour then

A. the labor market for automobile workers will remain in equilibrium.

B. there will be a shortage of labor in the market.

C. there will be a surplus of labor in the market.

D. the unemployment rate for automobile workers will go down.

Answer 1

D. an increase in demand means a rightward shift in the demand for labor, causing a higher wage rate and more workers hired

part 2

about a $30 wage rate unchanged during a lower demand for the product

there will be a surplus of labor

C is correct

the demand for labor is a derived demand from the demand for the product

if the demand for the product decreases, so does the demand for labor

But with a wage rate stuck at $30, more people will want to work than can be hired.

That's called a surplus of labor.