Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Labor supply decreases
B
Labor supply remains constant
C
Labor supply increases
D
Labor supply becomes inelastic
Understanding the Answer
Let's break down why this is correct
Answer
When wages increase in a competitive labor market, more people are motivated to work because they can earn more money. This means that the supply of labor goes up as more individuals enter the job market or decide to work longer hours. For example, if a factory raises its hourly wage from $10 to $15, some people who were not working may now apply for jobs there, and current employees may choose to work extra shifts. As a result, the factory has a larger pool of workers to choose from, which can help it produce more goods. Overall, higher wages attract more workers, leading to an increase in the supply of labor available to employers.
Detailed Explanation
When wages go up, more people want to work. Other options are incorrect because Some might think that higher wages mean fewer people will work; It's a common mistake to think that wages don't affect how many people want to work.
Key Concepts
labor supply
Topic
Profit Maximization in Labor Markets
Difficulty
easy level question
Cognitive Level
understand
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