Question

As the result of an increase in capital the demand for labor would_______, the supply of labor would ________, and the quantity of laborhired would __________.a. increase, increase, increaseb. increase, remain the same, increasec. increase, remain the same, decreased. increase, decrease, remain the samee. decrease, decrease, decrease

Answer 1

Answer:

The correct answer here is option b.

Explanation:

When here is an increase in capital, the firm would like to produce more. So, the demand for labor would increase. Though the supply of labor would remain the same as it is not affected by the change in capital.

With the shift in the demand curve, the quantity of labor hired would increase as well. With no change in labor supply, the wage rate will increase as well.