📚 Learning Guide
Demand and Supply in Labor Markets
easy

If the demand for labor increases when worker productivity rises, then the demand for a product produced by those workers would increase as the price of that product rises. Thus, A:B :: C:?

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Learning Path
Learning Path

Question & Answer
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3
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Choose the Best Answer

A

Demand for labor increases

B

Wages decrease

C

Supply of labor decreases

D

Employment levels remain unchanged

Understanding the Answer

Let's break down why this is correct

Answer

When worker productivity rises, it means that workers can produce more goods in the same amount of time. This increase in productivity often leads to a higher demand for labor because employers want to hire more workers to take advantage of the increased output. As the demand for labor goes up, the products those workers create also become more desirable, especially if the prices of those products rise. For example, if a factory can produce more toys quickly and efficiently, the demand for those toys will increase as more people want to buy them, even at higher prices. Therefore, if we think of A as labor and B as the product, then C would represent the rising demand for that product as productivity increases, making the relationship A:B :: C: demand for products.

Detailed Explanation

When workers are more productive, companies want to hire more of them. Other options are incorrect because Some might think that if demand for labor goes up, wages would go down; It's easy to think that more demand means less supply, but that's not true here.

Key Concepts

Demand for labor
Worker productivity
Wage structures
Topic

Demand and Supply in Labor Markets

Difficulty

easy level question

Cognitive Level

understand

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