Question

Suppose there is an increase in the wage and the demand for the consumption good falls, what can you say about the supply of labor? Group of answer choices
A. The supply of labor will definitely increase.

B. The supply of labor will definitely decrease.

C. Either A or B could be true depending upon the consumer’s preferences.

Answer 1

Answer:

A. The supply of labor will definitely increase. 

Explanation:

If wages rise, there would be an increase in supply according to the law of supply. The law of supply says the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.

If demand for consumer good decreases, the demand for Labour falls.