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what would happen to the supply and demand curve in the labor market if job creation...

what would happen to the supply and demand curve in the labor market if job creation increased ? what would happen to wages? explain using demand and supply analysis of the labor market.

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Answer #1

Ans. Increase in job creation will increase the demand for labour. This will shift the demand curve for labour rightwards from D to D'. This will lead to increase in wages which will lead to increase in  quantity supplied of labour because more wage will encourage those workers to again start looking for the job who had earlier quit looking for it. So, this will move the equilibrium to increased employment of L' and increased wage of w'.

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