📚 Learning Guide
Labor Demand Dynamics
medium

Arrange the following steps in the correct order to describe how an increase in wages affects labor demand in the market: A) Employers reduce the number of jobs offered, B) Workers supply more labor, C) Higher wages lead to a decrease in labor demand, D) Increased wages attract more job seekers.

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Learning Path

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Choose the Best Answer

A

D → B → C → A

B

B → A → D → C

C

A → C → D → B

D

C → A → B → D

Understanding the Answer

Let's break down why this is correct

Answer

When wages increase, it can change how many workers employers are willing to hire. First, higher wages lead to a decrease in labor demand because employers may not want to pay more for the same work, so they might reduce the number of jobs offered. At the same time, higher wages attract more job seekers, as more people are interested in applying for jobs that pay better. This means that while workers supply more labor because of the higher wages, the overall number of jobs available may actually go down. For example, if a company raises its starting salary but faces higher costs, it might decide to hire fewer employees to keep expenses manageable.

Detailed Explanation

When wages go up, more people want to apply for jobs. Other options are incorrect because This suggests that workers supply more labor first, which is not true; This order implies that employers reduce jobs before anything else happens.

Key Concepts

Labor Demand Dynamics
Wage-Employment Relationship
Market Equilibrium
Topic

Labor Demand Dynamics

Difficulty

medium level question

Cognitive Level

understand

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