Chapter 71, Problem 4MCQ

To determine

The correct option for an increase in the wage rate.

Answer to Problem 4MCQ

From the available options, the correct option is it causes an upward movement along the labor supply curve.

Explanation of Solution

The supply curve of labor will shift upward when there is an increase in wage rate because people are strongly willing to supply more labor at a higher wage rate. There is a positive relationship between the quantity of labor supplied and the wage rate. Whereas, if there is a decrease in wage rate then people would not be willing to supply more labor, which shifts the supply curve downward. The change in wage rate affects the supplied quantity of labor as there is a positive relationship between them.

Therefore, the correct option is c and other all options are incorrect.

Economics Concept Introduction

Introduction: Working hours are the hours which are allowed to work according to the limits and guidelines of the government.

Wage rate is the minimum hourly rate that is paid to the labor or workers and this wage rate is set by the government.