If we were to observe aboveequilibrium wages in a particular

If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that... The theory of efficiency wages holds true for that market. There is a powerful labor union representing workers in that market. All of these answers are correct. Workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up in that market. If the productivity of computer engineer increases, what will happen to the demand curve for computer engineers? O It will shift to the left. O It will shift to the right. It will remain unchanged. The direction of the shift is ambiguous. Which of the following would shift a market labor supply curve to the left? An decrease in immigration An increase in the price of output O An increase in productivity A decrease in productivity

Solution

For the first question all the options are correct. Minimum wage efficiency Wage and union wage all lie above the market clearing wage rate.

For the second question the demand curve will shift to the right. Note that the demand curve is the marginal revenue product curve where the marginal revenue product is the multiply of marginal productivity and price of output. Higher marginal productivity will result in higher marginal revenue product and greater demand for labour

For the third question the decrease in immigration is correct. This will reduce the labour force and therefore the labour supply curve will shift to the left.