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JAMB Economics 1994 Question 18

Question 18

Labour Market

An increase in the supply of labour in a factory while other things remain equal will lead to

  1. A.an increase in the wage rate and an increase in the number of people employed
  2. B.a decrease in the wage rate and a decrease in employment
  3. C.an increase in the wage rate and decrease in employment
  4. D.a decrease in the wage rate and an increase in employment
Show the answer and explanation

Answer: D (a decrease in the wage rate and an increase in employment)

Explanation

More labour supplied shifts the supply curve to the right: the wage falls and more workers are hired.