Refer to the following diagram of a competitive labor market. Suppose the wage is currently W3...
Refer to the following diagram of a competitive labor
market.
Suppose the wage is currently W3 and L1 is the level of employment.
Then we should expect the wage to
|
rise and employment to rise. |
||
|
fall and employment to fall. |
||
|
rise and employment to fall. |
||
|
fall and employment to rise. |
Homework Answers
ANSWER:
The correct answer is option a that is wage to rise and employment to rise because the wage is below the equilibrium level and therefore it will rise till it reaches the equilibrium point and with the rise the , the employment will also rise as the employment level is also below the equilbrium point.
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Refer to the following diagram of a competitive labor
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