Increase/decrease Suppose there is an increase in the labor force participation rate. You would expect theequilibrium wage to [Select]and the equilibrium quantity of laboremployed to [ Select ]ASUS

Answered: Suppose there is an increase in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Increase/decrease

Suppose there is an increase in the labor force participation rate. You would expect the
equilibrium wage to [Select]
and the equilibrium quantity of labor
employed to [ Select ]
ASUS

Expert Solution

Step 1

The equilibrium level of wage and quantity of worker or labor is determined by the point of intersection of the labor demand and labor supply curve. If the participation rate of labor force increases, the number of labor increase in the labor force and this will increase the supply of worker in the market. As a result, the supply curve of worker shift towards right or downward as a result the new equilibrium wages decreases and the equilibrium number of worker increases at new equilibrium where new supply curve intersects the original demand curve as the firm will employ more worker at lower wage rate.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions