Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
An increase in the overall unemployment rate
B
A decrease in the demand for labor
C
A rise in minimum wage legislation
D
An increase in labor productivity
Understanding the Answer
Let's break down why this is correct
Answer
In a labor market equilibrium, a decrease in the equilibrium wage can occur when there is an increase in the supply of workers without a corresponding increase in demand for those workers. For example, if a new training program is introduced and many people gain skills in a specific field, the number of qualified workers increases. If employers do not need to hire more workers because their demand stays the same, they can pay lower wages since more people are available for the jobs. This situation leads to more competition among workers for the same positions, which can push wages down. Thus, when the supply of labor rises while demand remains unchanged, equilibrium wages tend to decrease.
Detailed Explanation
When there is less demand for workers, companies don't need to pay as much. Other options are incorrect because Some might think that more unemployment means lower wages; People might believe that raising the minimum wage always lowers other wages.
Key Concepts
equilibrium wage
unemployment rate
economic indicators
Topic
Labor Market Equilibrium
Difficulty
hard level question
Cognitive Level
understand
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