Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Wages decrease until equilibrium is restored
B
Wages increase to attract more workers
C
Employment levels rise indefinitely
D
Firms will hire more workers regardless of costs
Understanding the Answer
Let's break down why this is correct
Answer
When the labor supply exceeds labor demand in a market, it means there are more people looking for jobs than there are jobs available. This situation can lead to higher unemployment rates, as many workers may struggle to find employment. For example, if a factory has only ten job openings but receives applications from twenty people, ten will get jobs while the other ten will not. As a result, wages may also decrease because employers have more candidates to choose from, allowing them to pay less. Overall, this imbalance can create challenges for workers and the economy as a whole.
Detailed Explanation
When more people want jobs than there are jobs available, wages go down. Other options are incorrect because Some might think wages go up to get more workers; It's a common mistake to think employment keeps rising.
Key Concepts
Labor Market Equilibrium
Supply and Demand
Wage Determination
Topic
Labor Market Equilibrium
Difficulty
easy level question
Cognitive Level
understand
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