
In the labor market, what causes a movement along the

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.
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
Want to see more full solutions like this?
Chapter 4 Solutions
Principles of Macroeconomics 2e
Additional Business Textbook Solutions
Horngren's Accounting (12th Edition)
Foundations Of Finance
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Operations Management
Financial Accounting (12th Edition) (What's New in Accounting)
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
- 17. Given that C=$700+0.8Y, I=$300, G=$600, what is Y if Y=C+I+G?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all. Write explanation in paragraphs and if you use currency use USD currency: 10. What is the mechanism or process that allows the expenditure multiplier to “work” in theKeynesian Cross Model? Explain and show both mathematically and graphically. What isthe underpinning assumption for the process to transpire?arrow_forwardUse the Feynman technique throughout. Assume that you’reexplaining the answer to someone who doesn’t know the topic at all. Write it all in paragraphs: 2. Give an overview of the equation of exchange (EoE) as used by Classical Theory. Now,carefully explain each variable in the EoE. What is meant by the “quantity theory of money”and how is it different from or the same as the equation of exchange?arrow_forward
- Zbsbwhjw8272:shbwhahwh Zbsbwhjw8272:shbwhahwh Zbsbwhjw8272:shbwhahwhZbsbwhjw8272:shbwhahwhZbsbwhjw8272:shbwhahwharrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all:arrow_forwardUse the Feynman technique throughout. Assume that you’reexplaining the answer to someone who doesn’t know the topic at all: 4. Draw a Keynesian AD curve in P – Y space and list the shift factors that will shift theKeynesian AD curve upward and to the right. Draw a separate Classical AD curve in P – Yspace and list the shift factors that will shift the Classical AD curve upward and to the right.arrow_forward
- Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 10. What is the mechanism or process that allows the expenditure multiplier to “work” in theKeynesian Cross Model? Explain and show both mathematically and graphically. What isthe underpinning assumption for the process to transpire?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 15. How is the Keynesian expenditure multiplier implicit in the Keynesian version of the AD/ASmodel? Explain and show mathematically. (note: this is a tough one)arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 13. What would happen to the net exports function in Europe and the US respectively if thedemand for dollars rises worldwide? Explain why.arrow_forward
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningBrief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning





