question archive Based on economic theory, what is the effect on the labor market when wages are above the equilibrium wage?
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Based on economic theory, what is the effect on the labor market when wages are above the equilibrium wage?
When wages are above the equilibrium point in the labor market, it will result to an increase in the supply of labor and a decrease in the demand for labor resource in the market. This will be causing a downward pressure on the wages in the market and making wages to shift downward. The new equilibrium will be at a lower wages