Question

In the market for construction workers, you observe that wages have increased by 20% and at the same time employment has increased by 10%. This is the result of:a. an increase in labor demandb. a decrease in labor supply c. an increase in labor supply d. a decrease in labor demand

Answer 1

Answer: a. an increase in labor demand

Explanation:

When there is an increase in the demand for something, you will find that the price of that thing will go up because with more people demanding it, people will have to pay more to access it.

Here the cost of hiring people (wages) has gone up which would indicate therefore that the demand for labor has increased.

With this increase in demand, more people will be employed as well to match this demand which is why the employment rate has risen as well.