Which of the following is likely to happen if the government of a country introduces a subsidy on job creation?
A) The labor demand curve will shift to the left.
B) The labor supply curve will shift to the left.
C) The labor demand curve will shift to the right.
D) The labor supply curve will shift to the right.

Question

Quizplus · Accepted Answer

When the government introduces a subsidy on job creation, it reduces the cost of hiring workers for firms. This reduces the firms' marginal cost of labor and because of this, they will demand more labor at each wage than they did before. This will shift the labor demand curve to the right. Therefore, the correct choice is C, as the labor demand curve will shift to the right.

Which of the Following Is Likely to Happen If the Government