PRINCIPLES OF MACROECONOMICS (OER)
2nd Edition
ISBN: 2810023110024
Author: OpenStax
Publisher: XANEDU
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Textbook Question
Chapter 4, Problem 1SCQ
In the labor market, what causes a movement along the demand curve? What causes a shift in the demand curve?
Expert Solution & Answer
To determine
The reasons why there is a movement along the demand curve and shifts in the demand curve in the labor market.
Explanation of Solution
In the labor market, when there are changes in the wage rate, there is a movement along the demand curve. When the wage rate is high, the demand for labor is low and when the wage rate is low, the demand for labor is high.
This is due to the fact that, when the wage rate is high, the firms will need to pay higher wages to all the labor so the demand for labor will be low.
If there are changes to other factors other than price, such as change in the output, change in the production process, technology, then this will lead to a shift in the demand curve.
When there is an increase in the technology of production, despite being no change in the wage rate, it will lead to a decrease in demand and this is shown by a backward shift in the demand curve for labor. Similarly, when there is a sudden need to increase output, at the prevailing wage rate, they might want to use more labor, which leads to a rightward shift in the demand for labor.
Economics Concept Introduction
Concept introduction:
Law of demand- There is an inverse relationship between the price (wage rate) and the quantity demanded (demand for labor). When wage rate rises, demand for labor falls and vice versa.
Changes in demand- When there is a change in the variable such as price (here, wage rate) we see that there is a movement along the demand curve. When there is an increase in the wage rate, there is decrease in the demand for labor and vice-versa.
When there are changes other than the wage rate (such as changes in output, production process), we see that there is a shift in the demand curve. Rightward showing an increase in demand and backward showing a decrease in demand
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Chapter 4 Solutions
PRINCIPLES OF MACROECONOMICS (OER)
Ch. 4 - In the labor market, what causes a movement along...Ch. 4 - In the labor market, what causes a movement along...Ch. 4 - Why is a living wage considered a price floor?...Ch. 4 - In the financial market, what causes a movement...Ch. 4 - In the financial market, what causes a movement...Ch. 4 - If a usury law limits interest rates to no more...Ch. 4 - Which of the following changes in the financial...Ch. 4 - Which of the following changes in the financial...Ch. 4 - Identify the most accurate statement. A price...Ch. 4 - A price ceiling will have the largest effect:...
Ch. 4 - Select the correct answer. A price floor will...Ch. 4 - Select the correct answer. A price ceiling will...Ch. 4 - What is die price commonly called in the labor...Ch. 4 - Are households demanders or suppliers in the goods...Ch. 4 - Name some factors that can cause a shift in the...Ch. 4 - Name some factors that can cause- a shift in the...Ch. 4 - How do economists define equilibrium in financial...Ch. 4 - What would be a sign of a shortage in financial...Ch. 4 - Would usury laws help or hinder resolution of a...Ch. 4 - Whether the product market or the labor market,...Ch. 4 - Other than the demand for labor, what would be...Ch. 4 - Suppose that a 5 increase in the minimum wag...Ch. 4 - Under what Circumstances would a minimum wage be a...Ch. 4 - Suppose the U.S. economy began to grow more...Ch. 4 - If the government imposed a federal interest rate...Ch. 4 - Why are the factors that shift the demand for a...Ch. 4 - During a discussion several year; ago on building...Ch. 4 - Identify each of the following as involving either...Ch. 4 - Predict how each of the following events will...Ch. 4 - Predict how each of the following economic changes...Ch. 4 - Table 4.6 shows the amount of savings and...Ch. 4 - Imagine that to preserve the traditional way of...Ch. 4 - What happens to the price and the quantity bought...
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