The market for toothbrushes is perfectly competitive and the labor market for workers for this market is also perfectly competitive. Recently the wage rate for toothbrush workers decreased and the number of toothbrush workers employed increased.

Which of the following is the most likely cause of the change in the wage rate and number of workers employed described?

Choose 1 answer:
(A) the wage rate in another industry decreased
(B) the price of toothbrushes increases
(C) working conditions for toothbrush workers have worsened.
(D) worker productivity in the toothbrush market improves
(E) a large amount of labor exits the toothbrush labor market

Question

The market for toothbrushes is perfectly competitive and the labor market for workers for this market is also perfectly competitive. Recently the wage rate for toothbrush workers decreased and the number of toothbrush workers employed increased.

Which of the following is the most likely cause of the change in the wage rate and number of workers employed described?

Choose 1 answer:
(A) the wage rate in another industry decreased
(B) the price of toothbrushes increases
(C) working conditions for toothbrush workers have worsened.
(D) worker productivity in the toothbrush market improves
(E) a large amount of labor exits the toothbrush labor market

Accepted Answer

∻Solution∻ ‖ a ⋮ Wage Rate Decrease: When the wage rate for toothbrush workers decreases, it typically indicates a shift in the supply or demand for labor. ‖ ‖ b ⋮ Increase in Employment: The increase in the number of toothbrush workers employed suggests that the demand for labor has increased or the supply of labor has decreased. ‖ ‖ c ⋮ Worker Productivity: If worker productivity in the toothbrush market improves, firms can produce more output with the same number of workers, leading to higher demand for labor. This can result in a higher equilibrium quantity of labor employed and a lower wage rate due to increased efficiency. ‖ ‖ d ⋮ Conclusion: Therefore, the most likely cause of the decrease in the wage rate and the increase in the number of workers employed is an improvement in worker productivity. ‖ ∻Answer∻ ⚹ (D) worker productivity in the toothbrush market improves ⚹ ∻Key Concept∻ ⚹ Labor Market Dynamics ⚹ ∻Explanation∻ ⚹ An improvement in worker productivity increases the demand for labor, leading to higher employment levels. This increased efficiency can also result in a lower wage rate as firms can produce more with the same or fewer resources.◊What impact does a decrease in the wage rate for toothbrush workers have on the supply of labor in a perfectly competitive market?⍭ Generate me a similar question◊⚹

Sia