question archive Other things being equal, a decrease in the demand for labor in manufacturing will a
Other things being equal, a decrease in the demand for labor in manufacturing will a
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Other things being equal, a decrease in the demand for labor in manufacturing will
a. have no effect on either the equilibrium wage or the equilibrium quantity of labor supplied in manufacturing.
b. increase the equilibrium wage but decrease the equilibrium quantity of labor supplied in manufacturing.
c. decrease the equilibrium wage and the equilibrium quantity of labor supplied in manufacturing.
d. increase the equilibrium wage and the equilibrium quantity of labor supplied in manufacturing.
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The correct answer to the given question is option c. decrease the equilibrium wage and the equilibrium quantity of labor supplied in manufacturing.
A decrease in the demand for labor in manufacturing will lead to a decrease in the wages for laborers as the supply for labor will be more than the demand in the short-run. However, gradually, the supply for labor will also decreases as the suppliers will find it discouraging to supply labor at a lower price. Thus, the equilibrium price, the equilibrium demand and the equilibrium supply will decrease for labor in manufacturing.
