A decrease in the real wage would result in a
A)movement along the labour demand curve,causing an increase in the number of workers hired by the firm.
B)shift of the labour demand curve,causing an increase in the number of workers hired by the firm.
C)movement along the labour demand curve,causing a decrease in the number of workers hired by the firm.
D)shift of the labour demand curve,causing a decrease in the number of workers hired by the firm.

Question

Quizplus · Accepted Answer

A decrease in the real wage (the wage adjusted for inflation) would lower the cost of labor for the firm, leading to an increase in demand for labor. As a result, the labour demand curve would shift to the right, indicating that the firm is willing to hire more workers at any given wage rate. Therefore, there would be a movement along the labor demand curve, causing an increase in the number of workers hired by the firm.

A Decrease in the Real Wage Would Result in a