Chapter 13R, Problem 10MCQ

To determine

The correct option that defines the reason for shifting demand curve for labor towards the left.

Answer to Problem 10MCQ

Option c is correct.

Explanation of Solution

Explanation for correct option:

c.

If prices of the mug will increase then the demand for the mugs will decrease which will results into the decrease in the demand for labor. So, demand curve will shift towards left. Therefore, option c is correct

Explanation for incorrect options:

a.

If demand for mugs will increase then profit of the company and the demand for labor will also increase. This will result into the demand curve shifting towards right. Therefore, option a is incorrect.

b.

If decrease in price of the mugs happens then the demand will increase and the demand curve fro labor will shift towards right. Therefore, option b is incorrect.

d.

If marginal product of labor increases then demand will also increase. This will result in shifting of demand curve towards the right. Therefore, option d is also incorrect.

e.

If increase in labor availability happens then the demand for labor increases as labor is available at lower prices due to higher supply. This will increase the demand for labor. Therefore, option e is incorrect.

Economics Concept Introduction

Factor of production: Factor of production refers to the components or the resources that are required for producing intangible or tangible products.

Factor income: Factor income refers to returns received by the producer for inserting each factor of production as an input.