Question

A new law requires employers to provide health benefits to all workers who are employed more than 10 hours per week. This law results in a $3 per hour increase in the cost of hiring workers. The law is likely to ____ the demand for labor and _____ the equilibrium wage paid to workers.

Answer 1

Answer:

reduce

decrease

Explanation:

As a result of the new law, the cost of hiring labour would increase. This would lead to a reduction in the demand for labour. This decrease is in line with the law of demand.

According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded

There would be a leftward shift of the demand curve. This would lead to a fall in equilibrium price and quantity