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Homework answers / question archive / What effect will each of the following have on the market labor demand for a specific type of labor? A

What effect will each of the following have on the market labor demand for a specific type of labor? A

Economics

What effect will each of the following have on the market labor demand for a specific type of labor?

A.) An increase in product demand.

B.) A decline in the productivity of this type of labor.

C.) An increase in the price of a gross substitute for labor.

D.) A decline in the price of a gross complement of labor.

E.) The demise of several firms that hire this labor.

F.) A decline in the market wage rate for this labor.

G.) A series of mergers that transforms the product market into a monopoly.

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A) This would increase the demand as firms are willing to hire more labor at given any wage.

B) This would reduce demand. A decline in productivity of labor implies higher cost per unit of output for the firms. So the quantity of labor demanded will decline at any given wage.

C) The demand will increase. As price of substitute goes up, consumers are more likely to switch to the specific type of labor at any given wage.

D) The demand will rise. As price of complement go up, the quantity demanded of the complementary good will go up, so does the quantity demanded for the specific type of labor.

E) The demand will decline. Since fewer firms now hire the specific type of labor at any given wage, the market demand will decline.

F) No effect. The change in price only affects the quantity demanded, and doesn't affect the demand schedule.

G) This will reduce the demand. The monopoly will generally produce a lower quantity than in a competitive equilibrium, which reduces the quantity demanded for the specific type of labor at any given wage.