Question

2. Which of the following would decrease the demand for labor?

(i)	a decrease in the output price
(ii)	an increase in the output price
(iii)	a labor-saving technological advance

A. (i) only

B. (i) and (iii) only

C. (i) and (ii) only

D. (ii) and (iii) only

2. If a worker responds to an increase in the opportunity cost of leisure by taking less leisure, then his labor supply curve is

A. horizontal.

B. vertical.

C. backward sloping.

D.upward sloping.

3.If the wages of a CPA decrease,

(i)	her opportunity cost of leisure increases.
(ii)	her opportunity cost of leisure decreases.
(iii)	her hours of labor supply may increase.
(iv)	her hours of labor supply may decrease.

A. (i) and (iii) only

B. (ii) and (iv) only

C. (i), (iii), and (iv) only

D, (ii), (iii), and (iv) only

Answer 1

And 2 ) option B - (i) and (iii) only

(i)Decrease in output prices would decrease the demand for labour because with decrease in demand for goods , output prices and profitability will also decrease, so demand for labour will also decrease.

(iii) Labour saving Technological advance would decrease the demand for labour because by the word labour saving it reflects that company or business has made this technological advancment to save labour. Though technological advancment effects different kinds of labour differently .But if it is specifically labour saving advancement then with introduction of this technology , many workers may loose their job.

Option (ii) No ,increase in output prices will not decrease the demand for labour . Because increase in demand of goods will cause increase in prices and profits , so the demand for labour will increase to meet the increased demand.