3.9 Labor Markets

• The equilibrium in the labor market is determined by the intersection of labor supply and labor demand.

  True
• In labor markets, wages and employment levels are determined by demand and supply.

  True
• Arrange the factors that influence labor markets in a logical order of cause and effect:

  1️⃣ Changes in productivity

  2️⃣ Shift in labor demand

  3️⃣ Changes in equilibrium wage rate

  4️⃣ Changes in employment level
• Match the factor with its effect on labor demand:

  Technology ↔️ Increases demand for skilled labor

  Input prices ↔️ May substitute labor
• A larger population leads to a decrease in the overall supply of labor.

  False
• Education increases the supply of skilled workers in labor markets.


  True
• The equilibrium wage rate is established at the intersection of the labor supply and labor demand
• Technological advances always increase the demand for labor.

  False
• What are labor markets governed by?

  Labor supply and demand
• Where is the equilibrium wage rate established in labor markets?

  Intersection of supply and demand
• How does higher worker productivity affect labor demand?

  Increases labor demand
• What is the effect of higher productivity on labor demand?

  Increases labor demand
• What is the key outcome determined at the equilibrium in labor markets?

  Equilibrium wage rate and employment level
• How does a larger population affect wages in the labor market?

  Increases labor supply
• What is the primary effect of minimum wage laws on low-wage workers?

  Increased earnings
• Automation in technology leads to both job creation and job destruction in the labor market.


  True
• The equilibrium in the labor market occurs where marginal benefit equals marginal cost.


  True
• Match the factor with its impact on the labor market:

  Productivity ↔️ Higher wages and employment

  Education ↔️ Increased supply of skilled labor

  Technology ↔️ Shifts demand for skilled labor

  Wages ↔️ Increases labor supply
• What is marginal productivity of labor?

  Additional output from one worker
• The equilibrium wage rate is determined where labor supply equals labor demand.


  True
• The equilibrium wage rate is established by the intersection of the labor supply and labor demand curves.


  True
• Higher wages increase the willingness of workers to supply labor.


  True
• What is the primary purpose of wages for workers?

  Livelihood
• What is the term for disparities in pay and opportunities across different groups?

  Inequality
• Minimum wages aim to raise incomes for low-wage workers.

  True
• Technology can widen the skills gap in the workforce.

  True
• What has automation in manufacturing led to in terms of wages and employment?

  Higher wages for skilled roles
• What is the impact of offshoring and outsourcing on domestic labor demand?

  Reduced demand
• Labor markets are the markets where workers supply their labor and employers demand labor
• The equilibrium wage and quantity of labor are set where the marginal benefit to employers equals the marginal cost to workers
• Changes in labor demand or supply cause shifts in the equilibrium wage rate and level of employment.

  True
• The demand for labor increases when worker productivity rises.
• The supply of labor is influenced by population, education, and wages.
• The equilibrium in labor markets is determined by the intersection of the labor supply and labor demand curves.
• What effect does higher education have on the labor supply?

  Increases supply of skilled workers
• What effect does higher productivity have on labor demand?

  Increases labor demand
• Steps in the shift of labor supply or demand curves

  1️⃣ Change in a key factor (e.g., wages, productivity)

  2️⃣ Shift in the supply or demand curve

  3️⃣ New equilibrium with different wage and employment levels
• High productivity increases the demand for labor.


  True
• Match the labor market concept with its description:

  Marginal Benefit ↔️ Additional benefit to employers from hiring one more worker

  Marginal Cost ↔️ Additional cost to workers from providing one more unit of labor
• Higher input costs like capital can increase the demand for labor