Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class). If the supply of this kind of labor increases, we would expect a(n) _____________.
A. increase in equilibrium wage, W, and increase in equilibrium quantity of labor, L, employed.
When supply of labour increases, the supply curve shifts outward. As a result there would be an increase in equilibrium quantity but a decrease in wages
