- Which of the following is least likely to cause a change in the demand for labor? a. technology b. Other factor prices c. Price of the firm’s output d. An increase in the wage rate 2. According to income effect and substitution effect an increase in the wage rate will most likely have what effect on the supply of labor? income effect Substitution effect a. increase increase b. increase decrease c. decrease increase d. decrease decrease check for the answeres after tommorrow i.e. after 12 hours. I won’t have access to internet until then. good luck
I would say C&C
that was fast Map1 am still around in my office but leaving just now. The 2nd C is correct. congrats! but the fisrt one is wrong. try again will talk after 12 hours goodbye folks.
D and C Increase in wage rate decreases quantity of labor demanded, not labor demand.
But of course, it must be D for the first. That’s a change along the curve, not a change of the curve itself.
You guys are smart it D & C for D Map1 has explained. May be C does not need an explanation. Bye for reall now. Join you tomorrow it 9:18 pm here have to rush home.
Can someone explain 2. Thx.
Income effect: The higher the wage rate (other things remaining the same), the higher the worker’s demand for other goods, including leisure. That is, the worker would prefer more and more to relax in the Bahamas than work in a cubicle. That reduces the quantity of labor supplied. Substitution effect: the higher the rate offered to the worker, the greater the willingness of the worker to put in more hours.
CFAI text Volume II, page 260.
i thought i was good enough in economics… but was left stuck on the second one… thank you guys.