The correct option that defines the reason for shifting
Answer to Problem 9MCQ
Option a is correct.
Explanation of Solution
Explanation for correct option:
a.
If there is a decrease in the wage rates then the demand for workers will increase. This is a simple demand and supply rule where the demand curve will shift towards left if the quantity demanded for labor increases. Therefore, option a is correct.
Explanation for incorrect options:
b.
If wage rates are increased then firm will try to reduce the labor to maintain their cost of production. Thus firm’s demand will decrease if wage rates increases. Therefore, option b is incorrect.
c.
if labor productivity increases the demand for more or additional labor will decrease instead of increasing. Therefore, option c is incorrect
d.
If final price of the product is reduced then the demands for labor producing the output will automatically decreases as less labor is required to produce the decreased level of output. Therefore, option d is also incorrect.
e.
If the physical capital per worker is less available then required then the wage rates charged by the workers will increases which will reduce the labor demand as high wage rates are charged by them. Therefore, option e is incorrect.
Factor of production: Factor of production refers to the components or the resources that are required for producing intangible or tangible products.
Factor income: Factor income refers to returns received by the producer for inserting each factor of production as an input.
Chapter 13R Solutions
Krugman's Economics For The Ap® Course
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