What causes the labor demand curve to shift? (i)
Changes in productivity
(ii)
Changes in wages
(iii)
Changes in output prices
A)(i) and (ii)
B)(ii) and (iii)
C)(i) and (iii)
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Changes in productivity and changes in output prices can both cause the labor demand curve to shift. An increase in productivity will lead to an increase in demand for labor, while a decrease in productivity will lead to a decrease in demand for labor. Similarly, an increase in output prices will lead to an increase in demand for labor, as firms will want to produce more goods to take advantage of the higher prices, while a decrease in output prices will lead to a decrease in demand for labor. Changes in wages, however, affect the movement along the labor demand curve, rather than shifting the curve itself.

What Causes the Labor Demand Curve to Shift? (I)