Question Which of the following correctly explains the effect of a variable on the labor demand curve? A. If the wage increases, then the labor demand curve will shift to the right. B. If the quantities of other inputs increase, then the labor demand curve will shift to the left. C. If the price of the product increases, then we will move down the labor demand curve. D. If human capital increases, then the labor demand curve will shift to the right. E. If the number of firms in the market increases, then we will move up the labor demand curve.
Question
Which of the following correctly explains the effect of a variable on the labor demand curve?
A. If the wage increases, then the labor demand curve will shift to the right.
B. If the quantities of other inputs increase, then the labor demand curve will shift to the left.
C. If the price of the product increases, then we will move down the labor demand curve.
D. If human capital increases, then the labor demand curve will shift to the right.
E. If the number of firms in the market increases, then we will move up the labor demand curve.
Demand for labor indicates the number of labors which is hired at a particular wage rate. When wage rate increases, the firms hire less number of labors, which means quantity of labor demand decreases. It shows an upward movement along the labor demand curve. Any factor rather than wage will cause shift in labor demand curve. The factors that cause rightward shift in labor demand curve are increase in human capital, improvement in technology, increase in the product price, increase in the quantity of inputs and increase the number of firms in the market.
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