If the Supply of Labor Decreases, Which of the Following

question 84

Multiple Choice

If the supply of labor decreases, which of the following events will occur?

• A) The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate.
• B) The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate.
• C) The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate.
• D) The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate.

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Definitions:

Agent Liability

The legal principle that holds agents accountable for their actions, especially when such actions cause harm or breach contractual obligations.

Contract

A legally binding agreement between two or more parties that is enforceable by law.

Tort

A violation of another person’s rights or a civil wrongdoing that does not arise out of a contract or statute; primary types are intentional, negligent, and strict-liability torts.

Agent Liability

Refers to the legal responsibility of an agent to their principal, including obligations and potential for repercussions if the agent acts outside their authority or against the interests of the principal.