Chapter 2R, Problem 6MCQ

To determine

The question requires us to identify the most likely result of the higher wage.

Explanation of Solution

An increase in workers’ wages causes the input cost to rise and thus discourages the producers. Higher costs of production lead to a lower supply of goods and services.

So, an increase in workers’ wages will most likely lead to a decrease in the supply of goods and services.

Option “b” is correct.

Economics Concept Introduction

The following factors will change the supply of a product: 

• Change in input prices
• Change in price of relative goods and services
• Changes in technology
• Changes in consumers’ and producers’ expectations
• Change in the number of producers