QuestionMay 24, 2025

The demand curve for labor would shift leftward as the result of: a decrease in the price of capital, provided the output effect exceeds the substitution effect. an increase in the price of the product labor is producing. an increase in the price of labor. a decrease in the productivity of labor.

The demand curve for labor would shift leftward as the result of: a decrease in the price of capital, provided the output effect exceeds the substitution effect. an increase in the price of the product labor is producing. an increase in the price of labor. a decrease in the productivity of labor.
The demand curve for labor would shift leftward as the result of:
a decrease in the price of capital, provided the output effect exceeds the substitution effect.
an increase in the price of the product labor is producing.
an increase in the price of labor.
a decrease in the productivity of labor.

Solution
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Answer

A decrease in the productivity of labor. Explanation 1. Analyze the effect of a decrease in the price of capital A decrease in the price of capital can lead to more capital being used instead of labor if the substitution effect exceeds the output effect, causing the demand for labor to shift leftward. 2. Analyze the effect of an increase in the price of the product An increase in the price of the product typically increases demand for labor as firms produce more, shifting the demand curve rightward, not leftward. 3. Analyze the effect of an increase in the price of labor An increase in the price of labor does not directly shift the demand curve; it affects the quantity demanded along the curve. 4. Analyze the effect of a decrease in the productivity of labor A decrease in labor productivity makes labor less valuable, reducing demand and shifting the demand curve leftward.

Explanation

1. Analyze the effect of a decrease in the price of capital<br /> A decrease in the price of capital can lead to more capital being used instead of labor if the substitution effect exceeds the output effect, causing the demand for labor to shift leftward.<br /><br />2. Analyze the effect of an increase in the price of the product<br /> An increase in the price of the product typically increases demand for labor as firms produce more, shifting the demand curve rightward, not leftward.<br /><br />3. Analyze the effect of an increase in the price of labor<br /> An increase in the price of labor does not directly shift the demand curve; it affects the quantity demanded along the curve.<br /><br />4. Analyze the effect of a decrease in the productivity of labor<br /> A decrease in labor productivity makes labor less valuable, reducing demand and shifting the demand curve leftward.
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